From staff reports

As Washington continues to bitterly debate an economic stimulus package, with little common ground between Republicans and Democrats in sight, an intriguing proposal has been thrown into the mix by Senate Majority Leader Tom Daschle, D-S.

Tuesday, January 08, 2002

As Washington continues to bitterly debate an economic stimulus package, with little common ground between Republicans and Democrats in sight, an intriguing proposal has been thrown into the mix by Senate Majority Leader Tom Daschle, D-S.D.: Tax breaks for companies who hire employees, give raises or expand workers’ hours.

This kind of plan goes beyond the corporate assistance that made up the majority of the Republican House’s economic packages and does something concrete for workers. With unemployment up, it’s important for Washington to do something for employees as well as employers. Encouraging businesses to hire or pay more seems like a sensible way to stimulate the economy.

There are a few problems, however. For one, many small businesses would not get the benefit because they don’t pay corporate income taxes. And the plan’s biggest weakness is that it only looks forward one year. If the tax-break program is not in place after the first year and the economy has not recovered, what’s to stop companies from firing the people they hired in 2002? The incentive may need to remain in place for more than a year if it is to make a long-term difference.