A possible way to increase employment by use of the Tax Code

[ThomWV]

I believe the tax code can be used for social purpose, its done every day.

Let's let the dividends paid to investors be tax-free if the company has added jobs during the quarter in which the dividend was paid; in short let there be two classes of dividends, those that are taxed and those that are not with increased overall employment (year over year by quarter) being the criteria used to determine which a dividend is.

So if you get a dividend check from a company who's employment base grew, its tax free. But if you get a check from one that cut employment, well, you gotta pay taxes on that one. Let the companies issue the 1099's as appropriate, and let the facts of employment be verifiable.

It is the duty of CEO's to cause their companies to produce income for its investors, well, let those companies which increase their employment levels be the ones which are most attractive to investors - and let the market decide if companies that pare employment rolls or those which add to the lists of the employed will survive. Sounds like pure capitalism to me.

[Vincardog]

1. Add employment in a Chinese prison?

[customerserviceguy]

2. How would you increase jobs

in firms that don't pay dividends, because they reinvest profits in the business? Often, that reinvestment generates jobs both within the company that is not paying dividends, and in the firms where they buy their new equipment.

Often, it's the smaller businesses (that are the first to increase hiring in a resurgent economy) that don't pay dividends. Your proposal would primarily benefit mega-corporations that usually don't reinvest, they just buy up and dismantle other companies as part of their growth strategies.

[ProgressiveProfessor]

3. Social engineering with the tax code is part of the problem

Adding more to it will only make the situations worse.

[lostnfound]

4. Interesting idea but

calculating who added jobs and who didn't might be difficult with mergers and full-time equivalents and decisions to insource vs outsource segments of work. (If you cut your contract with the small business that cuts the grass just so you can hire your own laborer direct, net jobs may even be negative.) Many companies use attrition to accomplish layoffs -- they just don't backfill -- your method would encourage them to save up layoffs for one specific quarter and do it in one fell swoop.

[Statistical]

5. Likely unworkable.

a) dividend payers tend to be large static companies. Growth companies (those actually still doing significant hiring) tend not to pay dividends.

b) companies arne't hiring because there is no demand. They aren't going to start hiring just because the dividend is free.

c) at best companies will figure out how to game the sytem. net job increase of 1. Fire 5,000 highly paid senior people, hiring 5,001 entry level posistions. This will just lead to more churn in the job market.

Good idea but IMHO totally unworkable.

Companies aren't hiring because they don't see demand.
Companies don't hire as charity, or to "help out" or to do the ring thing.
Companies hire because demand is significant enough that NOT HIRING will cost them more money.

The problem is for 3 decades we "grew" the economy without wage increases by debt spending. Now consumers are both saving and paying down debt. Great thing for the individual horrible thing for the economy.

Take Joe Six Pack. Say he had an income of $20,000 per year (post taxes) and spent $22,000 a year ($2K in debt financing). Today Joe still has $20,000 per year job but he is paying down his debt $1,000 a year for net consumption of $1,000. Net-net you got -$3,000 in consumption. There is no easy solution to that. It will take a decade for American households to "unwind" they didn't accumulate that debt overnight and they won't get out of it overnight either.