I watched the Republican presidential debate on FOX last week and picked up on a two recurring themes: the manufacturing and labor markets. Apparently, the manufacturing segment of our economy represents only 9% of gross domestic product, down from 25% many decades ago. And with the labor market still weak and unemployment sitting just above 9%, questions abound on whether to extend unemployment benefits.
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Do you see what I see? Weve got a connection here. Instead of extending unemployment benefits, why not pay the monies to businesses to be used only to hire personnel, which will boost production, increase the number of taxpayers and in turn increase happiness and wealth in this country? The able-bodied unemployed want to work, they want to contribute.
Twenty-five years ago I hired a receptionist from a Work-Ability program funded by the county. Rather than be on welfare or unemployment, my receptionist was doing what she wanted to do: work. And it allowed me to do what I wanted to do: expand my business. My profits rose and I paid more in taxes. My receptionist worked rather than collect welfare and became a taxpayer too. A win-win situation, wouldnt you say?
Isnt this what President Franklin D. Roosevelt did during the great depression? He had contempt for welfare systems and so on May 6, 1933 he created the Works Progress Administration (WPA), which provided three million jobs in an economy that boasted 10 million unemployed workers.
This very same principle can be applied to the Earned Income Tax Credit. Anyone who is working only part time, if able, can take another job, subsidized by the government to make it a full-time gig possibly with child care included. Ive always said I dont believe that 47% of this nation should be exempt from paying their fair share of income taxes. Yet according to the IRS, those are the statistics. If every able bodied person went to work, the middle class, who has been taking up the slack for the lower income citizens and the wealthy corporations, might feel some overdue relief.
And speaking of wealthy corporations, the humongous tax credits given to big corporations are enough to make you sick. When you hear that Bank of America (NYSE:BAC) and Shell Oil and so many other big shots pay zip in income taxes and they enjoy refunds of millions and billions of dollars in tax credits, its hard not to have your stomach turn. Warren Buffett just announced that he pays a mere 17% in taxes and even he says that is not right!
Shut that down.
Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, CA and the author of Entrepreneur Press book, Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know, available at all major booksellers. Follow Bonnie Lee on Twitter at BLTaxpertise and at Facebook.