Sunday, October 02, 2011

Econ 101 Fail

Does anyone else see the problem with the Conservative job creation gimmick?
The federal government will announce a job-creation program on Tuesday, the CBC has learned.

The program, Hiring Credit for Small Business, is a tax cut aimed at small businesses and entrepreneurs interested in expansion but reluctant to add workers because of increased overhead costs, especially Employment Insurance premiums.

"Every time a small business hires an additional worker, it results in additional costs — everything from training to EI premiums," says a memo sent to the Conservative caucus and obtained by the CBC.

The program will give "the small business owner a tax cut equivalent to the additional EI premiums, up to $1,000," the memo says. "As a result, a small business could hire an additional worker at a salary of up to $40,000 or two part-time workers at a salary of up to $20,000 each and they would not have to pay additional EI premiums."

Small businesses find more room to expand in a robust and growing economy. More demand for product or service gives businesses incentives to grow and hire more workers In a recessed and maybe soon depressed [global] economy, there's no incentive for businesses to expand because there's no demand for their product. People are either out of work or soon think they will be and therefore won't spend and increase demand, making any tax cut for businesses functionally meaningless.

But then again, the edifice of modern Conservative economic thinking seems to orbit the apparent miracle social and economic cure-all that is the [tax, spending, program, welfare] cut. Seriously, we're beholden to these people?


Purple library guy said...

You don't understand. The confidence fairy will make it all right.

Steve said...


Gloria said...

In BC, small businesses are being killed by the HST. Many of the BC family's, can't make it to their next payday, let alone support small business owners. That's why they are folding.

I think Harper had better look at why. Canadians can save up to 50% by shopping in the U.S? He should be made to explain. Why is Canada known as, a rip off country?