USAToday published an opinion piece by the former governor of Massachusetts today, in which he spells out his issues with the tax deal, among them:
Part of the tax deal is a temporary reduction in payroll taxes. The president was insistent, however, that only the employee’s payroll taxes be reduced — the portion paid by the employer is to remain the same. Again, the president is looking to get more money into the hands of the consumer to boost near-term spending. But by refusing to lower the cost of hiring a new employee, he fails to encourage what the American people want even more than lower taxes — more good jobs. Like the income tax deal, the payroll tax deal will add to the deficit.
This mirrors what I said earlier this month:
The stimulus our economy needs is job creation, and not reducing the employer contribution means the expense of employment will remain the same – as if saving $1000 to $2000 dollars per employee wouldn’t give businesses an opportunity to hire additional workers. Increasing the employment rate would increase revenue to Social Security, but this plan will decrease revenue to a system that is already a massive liability to future generations – to the tune of $10 trillion!
Businesses need an incentive to hire, and this tax deal gives them none. Governor Romney also points out the harm to business in the temporary status of these cuts:
Of course, delay now is better than an immediate tax hike. But because the extension is only temporary, a large portion of the investment and job growth that characteristically accompanies low taxes will be lost. When entrepreneurs and employers make decisions to start or expand an enterprise, uncertainty about tax rates translates directly into a reduced propensity to invest and to hire. With only a two-year extension, investors know that before their returns are realized, tax rates may be jacked up to the levels favored by President Obama. So while the tax deal will succeed in temporarily putting more money in the hands of consumers, it will fail to deliver its full potential for creating lasting growth.
I believe this tax package will do more harm than good – adding to the national debt, and failing to create jobs. It’s good to see that not all conservatives are supportive of this deal, and I’m glad someone with the intelligence and stature of Mitt Romney has spoken up to say so.