Saturday, February 27, 2010

employment taxes

It seems odd that in this era of the jobless recovery and declining real median income that we are still taxing employment. The 7.5% social security, unemployment insurance, workers comp, though they're all unimpeachable uses of funds, all make it more expensive for businesses to hire people. Health insurance also famously adds to the cost of hiring. In this high-productivity and low-employment growth era, it's high time we found another economic transaction to piggyback on. I'd love to see a federal sales or excise tax, and if it were coupled with a lower tax on employment-based social security who would complain? Another possibility would be catalog and internet shopping. People owe use tax to their home state on those transactions already, but states probably need federal help to enforce those liabilities.

The jobs bill is fine, but we should recognize that the jobs problem isn't temporary. Jobs are disappearing. Since the 1980s, companies have been avoiding hiring and finding alternative ways of responding to growth. I have no doubt that most people will make do perfectly well in their new entrepreneurial / consulting / temp / home office careers. But stable jobs are a good option for most people and for the economy and we should adjust our tax system to promote them.