Can Tax Credits "Create" Jobs?

When will politicians learn that one time tax credits will not create jobs!

Union Leader:
"'The lousy economy, which not only was in Coos County but all over the world, had a lot to do with the fact jobs weren't created and companies were not growing,' Lynch told the AP.

Lynch stands behind the credit as a tool that still could bring jobs to the county once the economy improves. He points out that the credit does not cost the state anything unless jobs are created.

Lynch had not estimated the number of jobs he expected the credit to create, but admitted he was surprised at the small number.

'It's not clear that it couldn't work,' Lynch said.

The credit is given to businesses for each new, full-time, year-round employee hired in the county. A business that creates a job paying at least 150 percent of minimum wage would be eligible for a $750 credit against its business taxes for each of the next five years, while a company that creates a job paying twice the minimum wage would receive a $1,000 credit. Health benefits can be added to the wage to determine whether the job qualifies."

Lets take a second and see why this makes so little sense...

Lets say I own a small business and decide to "create" a job paying 1.5 times minimum wage so that I can receive the tax credit. That would work out to $10.88 per hour X 40 hours per week X 50 weeks a year = $21,700 per year and as such my company would be "eligible" for a tax credit or $750 X 5years = $3750. So in 5 years I will have paid that person $108,500 just to receive a $3750 tax credit.

No lets say I am generous and create a job at 2x minimum wage or $14.50 per hour X 40 hours per week X 50 weeks per year = $29,000 per year just to get $1000 X 5 years = $5000 in tax credits. So I would pay $145,000 to get $5000 in tax credits.

Businesses are in business to be in business. Any manager or small business owner that made hiring decisions based on the economics of a tax credit would not be in business long. In each of the above examples the business would have to justify the new job with a corresponding jump in revenue.

The real way to "create" jobs is to create an environment where companies have a NEED for more labor.