President Barack Obama's proposed $447 billion jobs bill will fail to do the one thing it aims to do — create jobs, according to the Tax Foundation.
The program, a blend of tax cuts and development aid and other projects, won't work because they only offer temporary tax relief and will be offset by $460 billion in permanent tax increases, the Tax Group finds.
The plan calls for a 50 percent payroll tax cut for workers, and a business investment incentive that allows for 100 percent expensing of qualifying business deductions, the Tax Foundation reports.
Tax cuts won't spark consumer demand — a crucial missing link in U.S. economic recovery — since they won't last.
“Much of the problem with the President’s tax proposals stems from their temporary nature. The same is true of both households and corporations – they don’t make the kind of economic decisions the administration is hoping to see based on temporary changes in tax policy,” says Tax Foundation economist David S. Logan in a statement.
The payroll tax cut will only encourage American individuals and businesses to pay off debts, while tax incentives the act provides to employees opens up a loophole: a company can fire a worker, rehire another for the same job and collect the benefit while not making a single dent in high unemployment rates.
Obama plans to finance the jobs bill in part by cutting deficits, which means higher taxes.
The president has unveiled a plan to hike taxes on America's wealthy — part of a $1.5 trillion tax hike.
"It's only right we ask everyone to pay their fair share," Obama says, adding he believes spending cuts alone won't ease the country from its debt overhang.
"We can't just cut our way out of this hole."
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