Job Creation Idea

mikemike · 10-13-2010, 07:23 AM

Looking at this chart gave me an idea to fix the labor market imbalance that I don’t believe anyone else has floated yet.

Create a once in a lifetime 2 year labor hiatus tax credit for married households filing jointly. Taking the credit would require one spouse to leave the labor market voluntarily (not receive a W2 or have a very low maximum W2 ~$5,000-10,000 and not taking UI benefits) in exchange the tax rate for the household’s remaining income is 0% up to $250,000 and they get a refund of their FICA taxes. I think this would work because for many dual income households with kids – such as mine – taxes and expenses related to the second job (downtown parking, second car, child care, work wardrobe, dry cleaning, ordering takeout because we are both too tired to cook, etc.) easily add up to 50-60% of the household pretax income. If one of us could take a couple of years off and the remaining worker’s post tax salary was the same as the pretax salary it would be very good incentive because the loss of post tax income would be negligible compared to the increased quality of life from having more time with the kids instead of sending them to daycare. It should be a once in a lifetime thing tied to a social security number so that it is not abused by people who just want to be stay-at-home parents forever.

Every household that took advantage of this would reduce the supply of labor by one and increase the demand for labor by one. So if a few million could voluntarily do this it would create opportunity for twice as many unemployed people who really need jobs to support their families.

It strengthens incentives for marriage and cuts taxes for married couples too, so that should help getting culture warriors and republicans on board.

Nesster · 10-13-2010, 12:56 PM

Interesting idea.

The inevitable jokes:

1) must make sure none of you nor your spouse nor the new hire for your spouse's spot is an illegal alien, nor are your children anchor babies.
2) must make sure this is gender neutral
3) must decide gay marriage issue
4) must provide for offshoring both jobs via corporate tax credit
5) were you ever subject to the AMT?
6) this sounds vaguely Scandinavian. Is that OK?

raz-0 · 10-13-2010, 02:06 PM

The problem is this doesn't create jobs. It is really no different than unemployment insurance except that, absent any specification, the full sum seems to come out of federal tax dollars rather than a mix of state and federal and it comes out of tax revenue rather than being a reimbursement.

Also, the marriage rate is dropping. Which means your pool of potential jobs is shrinking year on year.

I mean i would take advantage of it in an instant. But that's because my wife's after tax income is about the same as what I pay in taxes, we're having a kid, and and she could still work part time. The closer the two incomes ina household are to parity, the less viable it would be.

jeffkrol · 10-13-2010, 05:17 PM

not much different then my suggestion to LOWER the retirement age......

Seems I'm not alone........

Quote:

The right-wing reaction to this, of course, will be to say that with fewer people working and more people drawing benefits, it would bankrupt Social Security and destroy the economy. But history shows the exact reverse.

Instead, it would eliminate the problem of unemployment in the United States. All those Boomers retiring would make room in the labor market for all the recent high-school and college graduates who are now finding it so hard to find a job.

If enough Boomers left the job market, it would even flip the current dynamic of too-many-people-chasing-too-few-jobs upside down, and create a tight labor markets. Tight labor markets drive up wages.

And as wages go up, tax revenues -- which are paying for Social Security (among other things) -- would increase.

Thom Hartmann: Want to Stimulate the Economy? Lower the Retirement Age to 55 Now!
Lower retirement age to 50-something - CNN.com
http://www.huffingtonpost.com/2010/02/22/kucinich-proposes-lowerin_n_471280.html
I really, really, really want a full blown economist to take a look at this.. sometimes the crazy ideas are right........

GeneV · 10-14-2010, 05:28 AM

Originally posted by jeffkrol

not much different then my suggestion to LOWER the retirement age......

Seems I'm not alone........

Thom Hartmann: Want to Stimulate the Economy? Lower the Retirement Age to 55 Now!
Lower retirement age to 50-something - CNN.com
Kucinich Proposes Lowering The Retirement Age To 60 For Six Months
I really, really, really want a full blown economist to take a look at this.. sometimes the crazy ideas are right........

That was one of the reasons for Social Security to begin with.

In point of fact, 55+ year olds are prime targets for layoffs, since they are paid more and may have pension benefits no longer offered. If they catch them just right, they can prevent the pensions from fully vesting.

jeffkrol · 10-14-2010, 06:10 AM

Originally posted by GeneV

That was one of the reasons for Social Security to begin with.

In point of fact, 55+ year olds are prime targets for layoffs, since they are paid more and may have pension benefits no longer offered. If they catch them just right, they can prevent the pensions from fully vesting.

That's been the MO for at least a generation though it had less to do w/ "vesting" at the time since most was only 10 years service.. coming from an industrial city it was rampant in the prev. generation.. Fortunately we still had unions (one of the driving factors for them BTW) though the companies could still make life hell on it's "senior staff"........ My father was lucky in that sense, though he was "non-union" in his senior years he still maintained his union status w/ a withdrawal card and dues paying.. became a funny (sort of) cat and mouse game. They eventually won (forced early retirement) but it was not AS EARLY as expected...of course my father was "demoted" back to union status, shift changed and was no longer in a supervisory status and just a "grunt"... which was very hard on him..
Adding to his "luck" was when the company was "busted up" he maintained his pension and health benefits w/ the "core company". Many of his friends were convinced to move their pensions into some of the pieces funds.. which unfortunately dried up and most lost many if not all of their pension "entitlements"....

10-13-2010, 07:23 AM	#1
mikemike Inactive Account Join Date: Apr 2010 Location: New Orleans Photos: Gallery Posts: 3,053	Job Creation Idea Looking at this chart gave me an idea to fix the labor market imbalance that I don’t believe anyone else has floated yet. Create a once in a lifetime 2 year labor hiatus tax credit for married households filing jointly. Taking the credit would require one spouse to leave the labor market voluntarily (not receive a W2 or have a very low maximum W2 ~$5,000-10,000 and not taking UI benefits) in exchange the tax rate for the household’s remaining income is 0% up to $250,000 and they get a refund of their FICA taxes. I think this would work because for many dual income households with kids – such as mine – taxes and expenses related to the second job (downtown parking, second car, child care, work wardrobe, dry cleaning, ordering takeout because we are both too tired to cook, etc.) easily add up to 50-60% of the household pretax income. If one of us could take a couple of years off and the remaining worker’s post tax salary was the same as the pretax salary it would be very good incentive because the loss of post tax income would be negligible compared to the increased quality of life from having more time with the kids instead of sending them to daycare. It should be a once in a lifetime thing tied to a social security number so that it is not abused by people who just want to be stay-at-home parents forever. Every household that took advantage of this would reduce the supply of labor by one and increase the demand for labor by one. So if a few million could voluntarily do this it would create opportunity for twice as many unemployed people who really need jobs to support their families. It strengthens incentives for marriage and cuts taxes for married couples too, so that should help getting culture warriors and republicans on board.

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10-13-2010, 12:56 PM	#2
Nesster Veteran Member Join Date: Oct 2006 Location: NJ USA Photos: Gallery Posts: 13,072	Interesting idea. The inevitable jokes: 1) must make sure none of you nor your spouse nor the new hire for your spouse's spot is an illegal alien, nor are your children anchor babies. 2) must make sure this is gender neutral 3) must decide gay marriage issue 4) must provide for offshoring both jobs via corporate tax credit 5) were you ever subject to the AMT? 6) this sounds vaguely Scandinavian. Is that OK?

10-13-2010, 02:06 PM	#3
raz-0 Veteran Member Join Date: May 2007 Location: Central NJ Posts: 470	The problem is this doesn't create jobs. It is really no different than unemployment insurance except that, absent any specification, the full sum seems to come out of federal tax dollars rather than a mix of state and federal and it comes out of tax revenue rather than being a reimbursement. Also, the marriage rate is dropping. Which means your pool of potential jobs is shrinking year on year. I mean i would take advantage of it in an instant. But that's because my wife's after tax income is about the same as what I pay in taxes, we're having a kid, and and she could still work part time. The closer the two incomes ina household are to parity, the less viable it would be.

10-13-2010, 05:17 PM	#4
jeffkrol Veteran Member Join Date: Sep 2006 Location: Wisconsin USA Photos: Gallery Posts: 8,434	not much different then my suggestion to LOWER the retirement age...... Seems I'm not alone........ Quote: The right-wing reaction to this, of course, will be to say that with fewer people working and more people drawing benefits, it would bankrupt Social Security and destroy the economy. But history shows the exact reverse. Instead, it would eliminate the problem of unemployment in the United States. All those Boomers retiring would make room in the labor market for all the recent high-school and college graduates who are now finding it so hard to find a job. If enough Boomers left the job market, it would even flip the current dynamic of too-many-people-chasing-too-few-jobs upside down, and create a tight labor markets. Tight labor markets drive up wages. And as wages go up, tax revenues -- which are paying for Social Security (among other things) -- would increase. Thom Hartmann: Want to Stimulate the Economy? Lower the Retirement Age to 55 Now! Lower retirement age to 50-something - CNN.com http://www.huffingtonpost.com/2010/02/22/kucinich-proposes-lowerin_n_471280.html I really, really, really want a full blown economist to take a look at this.. sometimes the crazy ideas are right........

10-14-2010, 05:28 AM	#5
GeneV Veteran Member Join Date: Oct 2008 Location: Albuquerque NM Photos: Albums Posts: 9,830	Originally posted by jeffkrol not much different then my suggestion to LOWER the retirement age...... Seems I'm not alone........ Thom Hartmann: Want to Stimulate the Economy? Lower the Retirement Age to 55 Now! Lower retirement age to 50-something - CNN.com Kucinich Proposes Lowering The Retirement Age To 60 For Six Months I really, really, really want a full blown economist to take a look at this.. sometimes the crazy ideas are right........ That was one of the reasons for Social Security to begin with. In point of fact, 55+ year olds are prime targets for layoffs, since they are paid more and may have pension benefits no longer offered. If they catch them just right, they can prevent the pensions from fully vesting.

10-14-2010, 06:10 AM	#6
jeffkrol Veteran Member Join Date: Sep 2006 Location: Wisconsin USA Photos: Gallery Posts: 8,434	Originally posted by GeneV That was one of the reasons for Social Security to begin with. In point of fact, 55+ year olds are prime targets for layoffs, since they are paid more and may have pension benefits no longer offered. If they catch them just right, they can prevent the pensions from fully vesting. That's been the MO for at least a generation though it had less to do w/ "vesting" at the time since most was only 10 years service.. coming from an industrial city it was rampant in the prev. generation.. Fortunately we still had unions (one of the driving factors for them BTW) though the companies could still make life hell on it's "senior staff"........ My father was lucky in that sense, though he was "non-union" in his senior years he still maintained his union status w/ a withdrawal card and dues paying.. became a funny (sort of) cat and mouse game. They eventually won (forced early retirement) but it was not AS EARLY as expected...of course my father was "demoted" back to union status, shift changed and was no longer in a supervisory status and just a "grunt"... which was very hard on him.. Adding to his "luck" was when the company was "busted up" he maintained his pension and health benefits w/ the "core company". Many of his friends were convinced to move their pensions into some of the pieces funds.. which unfortunately dried up and most lost many if not all of their pension "entitlements"....