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Published on March 2, 2010

OPINION: Small biz tax break for hiring could help



President Barack Obama's idea of a tax cut for businesses that hire new workers could help small rubber processors. Whether the idea gets any traction, though, is another matter.

The proposal calls for a company to get a $5,000 payroll tax deduction for each person hired, on a net basis. The rules would prevent a firm from just firing and then rehiring people, and would be capped at $500,000 per employer.

The White House estimates this would cut business taxes by $33 billion.

Support for the idea varies, but overall it isn't getting much love, not surprisingly, from Obama's Republican opponents. The president reached out to the GOP to join him on job creation, but even if it is a tax cut, it's an election year (isn't it always?), so good luck with that.

Economists are divided on the subject. The main complaints from naysayers is that $5,000 is just a drop in the bucket compared with the total cost of an employee, and they worry the tax cut will add to the federal deficit.

Supporters say such a credit would encourage companies that are on the fence about hiring people to take the plunge. That's why it could benefit smaller rubber processors.

During the protracted economic downturn, the rubber industry suffered along with the entire manufacturing sector. Many of the survivors remained solvent by going into crisis mode, which included job cuts.

Now that the worst of the recession seems to be easing, if ever so slowly, rubber companies can be expected to add people as their business picks up. After what they went through, they'll be doing that judiciously.

A $5,000 tax credit per employee may mean little to a giant tire company, but for a small processor that would like to add staff, sure, this could have an impact.

It's one of those “why not” issues: It can't hurt, and it certainly may help a little. The rubber industry should embrace it.

This editorial recently appeared in Rubber & Plastics News, an Akron-based sister publication of Tire Business.


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