Right now the US is trying to figure out how to jump start the economy. Most of the proposals involve sending people money from the government or temporarily lowering taxes. The idea on sending everyone a “rebate” goes like this:
When people have extra money they spend more, when people spend more businesses have to hire more workers. When more people have jobs, the earn money and in turn have more money to spend. So the idea is to “prime the pump” and get the cycle started.
The idea of lowering taxes follows the same thinking, but there has been some talk of lowering corporate taxes. The idea here is that if businesses are charged a lower tax rate, investors will be more willing to put their money at risk starting new businesses because they have a greater potential return on their investment. More businesses hire more workers and give them more money … and so on.
My question to you is this: How would you jump start the economy of a nation? Here are a few random ideas of my own for starters:
1. Make it easier to hire people off unemployment. For example, the government could give an employer a 90 day tax break on all the taxes they pay for employees that are coming off unemployment. This would help encourage businesses to hire people who are currently costing the government money and could drastically reduce the expenses of hiring someone until the company knows if they are a good fit or not.
2. Teach people how to start their own business. For example, if you are on unemployment, you have to spend at least 10 hours per week in classes designed to show you how to take your existing skills and find work as a sole proprietor.
3. Create a tax free for-profit business entity. The idea here would be to allow people to run a business without paying taxes on the profits if it is setup to employ people who are out of work. This would help attract investors because of the potential for a higher rate of return. The payouts to investors could still be taxed, but the corporation itself wouldn’t pay taxes on any retained earnings. The logic would be that retained earnings are there to help the corporation continue to hire people in the future.
So there are three slightly random ideas. What would you do?