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Jobs and Taxes

Tom PattonThe incoming speaker of the Florida House and president of the Florida Senate held a summit in Orlando at the end of last week to get a feeling from the Florida business community about how to improve on the states double-digit unemployment figures.

They heard a lot of ideas, and perhaps the best of them was a resounding repudiation of a proposal to raise unemployment taxes by as much as 1,000% on some small businesses. And businesses can breathe a sigh of relief as both Senate President-designate Mike Haridopolos and House Speaker-designate Dean Cannon said they would back a measure to defer the increase, and with any luck, they’ll defer it for a long, long time.

Maybe permanently.

As stingy as Florida’s unemployment benefits are, and having been on the unemployment rolls recently I know just how stingy that is, if the state really wants more jobs the last thing that needs to be done is to throw a big boost in any tax at businesses. In fact, a major boost in unemployment taxes would have exactly the opposite effect. Employers are not going to add jobs if they have additional taxes to pay on their existing employees, and would see an even larger increase if they brought more people on board. That just makes sense. And if the taxes are too high, it’s a fairly sure bet that Florida’s unemployment would climb even further.

Indeed, the way to spur businesses to create additional jobs is to give them some assurance that their taxes will at the very worst not go up. Employees are an expense, plain and simple, and if a business owner knows he or she has a additional tax burden coming, and no clear source of additional revenue, then it would be very unlikely that he or she would take on the additional expense of a new employee. That’s really pretty basic economics. If the state of Florida really wants to grow existing business, and attract new companies to come to the state, then the legislature has to not throw up roadblocks to those goals. And as stingy as unemployment compensation is in the state, I’d be willing to bet that most people on receiving those benefits would much rather have a good paying job, and be able to get it before they’d have to collect any unemployment. Indeed, the best unemployment insurance the state could offer is a business climate that creates a large pool of good paying jobs so that fewer people have to depend on unemployment.

Which I know is small comfort to those who are currently unemployed and are facing the end of their benefits.

If you’ve listened to The Observer Radio Show, you’ve likely heard regular guest Ron Allen's take.  He says that if, rather than dumping a trillion dollars into the banking bailout, the federal government had offered a 6 month moratorium on ALL taxes (including social security withholdings, business taxes, personal income taxes, etc.) they would have increased the federal deficit by less than the amount it will grow based on the bailouts. And in that, money would have been in people’s hands, and either spent or saved, which is deferred spending. The collective debt of the population would have been decreased drastically, and businesses would have seen it as an opportunity to create jobs.

It makes sense that the same would be true at the state level, although we are constitutionally bound to have a balanced budget. Higher taxes are never going to be more conducive to growing business.

Now, the downside is that the state is likely to have to borrow several million dollars from the federal government, at what will likely eventually be high interest rates. There are no easy answers to this dilemma. But it’s a sure bet that the answer is not to increase taxes on businesses. So the news that the state won’t do that in the midst of a recession is good news for anybody who’s looking for a job.

Jobs will be one of the topics on the table when I talk with State Senator Paula Dockery, a Republican Candidate for Governor, this week on The Jacksonville Observer Radio Show.  That's Wednesday afternoon at 5:00pm on ABC 1320 WBOB.

I hope you’ll join us.

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