Forget Tax Incentives!

With Congress and the Administration wringing their hands over how big to make tax incentives for small business so they will hire more people; they are—as usual—totally missing the boat. Tax incentives to hire more people will do little to increase jobs. As one small-businessman said in an interview the other night, “Tax incentives are nice and I’ll take them, but they do not encourage me to hire more people. Why would I hire someone that I have no work for and then turn around and lay them off again?”

What is really needed is more work! When small business owners have more work for their workforce, don’t think for a minute that they won’t hire the people they need to do that work—whether there are any tax incentives or not. That’s why they are called “business” owners.

All this haranguing and carping in Washington simply proves even further just how far out of touch with the real world our politicians actually are. Until demand for small business products and services increases, small business owners will NOT hire more people. It’s as simple as that.

4 thoughts on “Forget Tax Incentives!”

  1. We’ll see how it shakes down in the next 6 months. Obama stated he has proposed that small banks are given the support they need to fund small businesses and spur growth. The biggest problem I’ve heard from local small businesses isn’t low sales, it’s the loss of banks helping with their operating capital to either manufacture product or stock the shelves. Even small community banks are white knuckled about lending these days and that has to change or we’re all sunk!
    .-= Jeff´s last blog ..“The Green Screen Handbook” Off to the Presses! =-.

    1. Jeff – Thanks for the comment. I have been critical of banks not lending to small businesses for some time, and even posted about it a few times. But lately I have been watching interviews with small business owners who are saying they don’t really need, or want, to borrow money, because they have excess capacity now. That made me stop and think.

      If a business is sitting partially idle because there is no demand for their products or services, what good does tax incentives, or more borrowed money do for them? If the company is not profitable—and apparently 46 percent of U.S. businesses are not at present—no bank is going to lend them money anyway, regardless of the state of the economy…or banking.

      But what if there were programs that encouraged…and paid for…research and development so those companies could put at least a portion of their idle capacity back to work and rehire, or hire anew, people to develop new innovative products and services? It doesn’t look like doing the same old things is going to work, so maybe something new should be tried.

      Just thinking here.

  2. Hi Bob,

    We’re small business owners and even though a tax incentive sounds great for hiring on more staff, being in the construction industry, our problem is lack of work. If homes or commercial properties aren’t being built, our work load suffers. (Our area was hit hard and there is now a lot of inventory on the market.)

    Banks are hesitant to lend for new projects because of the inventory of existing properties and even then, unless the person has stellar credit, the banks won’t even consider loaning them money.

    What we’ve done is thought of ways to diversify and broaden our services without having to invest a lot of money doing so.

    Although the downturn of the economy has hurt our business, it’s opened our minds to finding ways to use our knowledge and expertise in other areas; which wouldn’t have happened if we had stayed as busy as were in the past. So, in that sense, it’s been a good thing…I think. 🙂
    .-= Barbara Swafford´s last blog ..One, Or A Million =-.

    1. Hi Barbara,

      “What we’ve done is thought of ways to diversify and broaden our services without having to invest a lot of money doing so…[the recession has] opened our minds to finding ways to use our knowledge and expertise in other areas…”

      What a tremendous attitude—this is what makes our small business world so great. Virtually all small businesses have been affected by the recession, but with the typical resilience and perseverance of those business owners, small business will not only survive, but will be poised to lead the new growth when the economy begins its true recovery.

      Thanks for this inspirational comment, and in the words of Winston Churchill—Never, never, never give up!

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