A Democratic lesson in job creation

Evidence suggests targeted tax credits work. So does electing Democratic presidents.


Andrew Leonard
October 18, 2008 8:30PM (UTC)

Labor economist Daniel Hamermesh, writing in the New York Times' Freakonomics blog, offers some useful insight into the new jobs tax credit proposed by Barack Obama earlier this week.

On Monday, as part of a sheaf of proposals designed to provide short-term relief to Americans struggling in a tough economy, Obama unveiled a $3,000 tax credit for each job created -- in the United States -- by an American corporation.

Advertisement:

Hamermesh, who says he worked on a similar intiative -- the "New Jobs Tax Credit" -- during the Carter administration, cites evidence suggesting the effectiveness of a targeted approach.

Unlike inefficient subsidies that provide funds for an activity that would have been undertaken anyway, this kind of marginal tax credit only subsidizes new activity. The benefit per dollar of credit is greater with this approach; it is more target-effective.

But really, there's no need to get fancy about it. If you want to boost private job creation in the United States, the historical evidence suggests that there is a very easy way to go about it.

Elect a Democrat.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

MORE FROM Andrew LeonardFOLLOW koxinga21LIKE Andrew Leonard

Related Topics ------------------------------------------

2008 Elections Barack Obama War Room

BROWSE SALON.COM
COMPLETELY AD FREE,
FOR THE NEXT HOUR

Read Now, Pay Later - no upfront
registration for 1-Hour Access

Click Here
7-Day Access and Monthly
Subscriptions also available
No tracking or personal data collection
beyond name and email address

•••


Fearless journalism
in your inbox every day

Sign up for our free newsletter

• • •