A tax cut for hiring?

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Catherine Rampell has the story in today’s NYT about the growing interest in the White House and elsewhere in Washington in a tax credit to entice businesses to hire. This was discussed as part of the stimulus legislation back at the beginning of the year but dropped. Now it’s back because, while the economy seems to be growing a bit, the job market is still a total disaster.

Rampell has done such an exhaustive job of covering the bases that it’s hard to add much. She’s got a link to a study on the impact of the last such federal tax credit in 1977 and 1978, which found that about 700,000 of the 2.1 million tax-credit-eligible jobs created during that span could be credited to the credit (how many times can I get the word “credit” into one sentence?). She talks to one of the designers of that tax credit, she talks to some long-time critics, she assesses the political odds, etc. If even all that isn’t enough for you, a couple of economists at the Federal Reserve Bank of San Francisco put together a nice summing-up early this year of the (modestly positive) evidence from various state hiring credits through the years.

The upshot: It could pass, possibly even with a bunch of Republican votes. It might help a little, although it’s not certain that it would be worth the cost. It’s unlikely to do major damage. By Washington standards, that sounds like a winner.