Tax breaks pushed to spur hiring

House Republicans will push this week to pass a series of tax breaks they say will give businesses incentive to hire the unemployed and give companies another reason to move to Georgia.

The package, which is expected to go to the House floor for a vote this week, provides a $2,400 income tax credit for each unemployed person that businesses hire before July 1, 2010, and keep on the job for at least 24 months. Employers get a $500 credit toward their unemployment insurance taxes for each unemployed person they hired.

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And the state would reduce and eventually eliminate the state’s 6 percent corporate income tax, beginning in 2012.

Combined, the tax breaks could save businesses more than $1 billion, and House Republicans hope they will persuade companies to start hiring again.

“This provides great opportunities … to bring some real stimulus to the state of Georgia,” said House Majority Leader Jerry Keen (R-St. Simons Island).

Opponents of the package say it may not create good-paying jobs. And it will slash revenue at a time when more and more Georgians rely on the state for health care, education and other services.

“Are we willing to pay $1 billion for a couple of thousand jobs when we don’t even know the quality of those jobs?” asked Sarah Beth Gehl, who analyzes tax policy for the Atlanta-based Georgia Budget and Policy Institute.

Rep. Sharon Beasley-Teague (D-Red Oak) raised some of those same questions last week when the House Ways & Means Committee approved the tax package.

“I am not looking for slave labor or indentured servants,” Beasley-Teague said. “What can we do to say to unemployed people, ‘you’re going to be able to pay your mortgage?’ “

She argued that employers would get the tax credit if they gave someone a 30-hour-a-week job. “They need 40 hours a week,” she said.

However, Rep. Tom Graves (R-Ranger), the plan’s lead sponsor, responded, “Being unemployed and then getting 30 hours a week is better than being unemployed.

“What I am trying to address is the over 400,000 Georgians who do not have a job, who don’t have an income.”

Roger Tutterow, a Mercer University economist, said tax incentives are probably the best fiscal policy the state can use to encourage businesses to hire.

“At the end of the day, businesses hire workers not out of some feeling of social benevolence but because it makes good business sense to them,” Tutterow said. “At the margin, this may tilt some corporations toward hiring.”

Tutterow has generally supported rolling back corporate income taxes, in part as a way to make Georgia more competitive to companies looking to relocate.

However, a fiscal analysis of the tax package signed by the state auditor and head of the Office of Planning and Budget suggested eliminating corporate income taxes might not have the big impact proponents hope for. “The phase-out of the corporate income tax is not expected to significantly alter growth conditions in Georgia,” it concluded.

Tutterow said state lawmakers can only do so much to spur job growth in the middle of a global recession.

“Certainly, you can make some changes in the tax code that could have marginal effect on employment or (economic) activity,” he said. “We’re somewhat limited in terms of what we can do.”

Gehl said Georgia already has some of the lowest taxes on businesses in the nation. Cutting them more may not make much of a difference in terms of creating good-paying jobs for Georgians, she said.

“The question is, how many new jobs are there going to be and how many are created just because of these incentives?” she asked.