On January 29, 2013, Mark Goldes, Founder and CEO of the AESOP Institute writes in the Huffington Post:
Youth unemployment can be sharply reduced by creating a Human Investment Tax Credit program which will generate up to 6 million jobs and create as many as 4 million small firms while providing generous incentives to employ young people.
In 1975, Bob Edmonds, L.V. Watkins, and I (Mark Goldes) submitted the first of two reports to the Economic Development Administration of the U. S. Department of Commerce. Both were entitled A HUMAN INVESTMENT TAX CREDIT PROGRAM — a component of an Anti-Inflation and Full Employment Alternative Economic Program. In 1977, the second report laid the groundwork for passage of an Employment Tax Credit Program as a stimulus to recover from the recession. Though it included only a few of the recommended incentives, it generated 2 million private-sector jobs, more than 20 percent of all new jobs created that year. It resulted in more jobs in less time than any single piece of legislation.
Opposed by the White House, the Job Tax Credit was little advertised. Only 34 percent of all businesses were aware of this little-publicized program, and a mere third of those eligible utilized the credits. Since Congress created the program over the Administration’s opposition, the following year it was gutted and became the Targeted Jobs Tax Credit, with only a small fraction of its previous effectiveness.
If promoted effectively, with all of the suggested incentives, it would have met or exceeded the original goal of generating three million to six million new jobs and encouraging one million to four million people to become self-employed.
The proposed Employment Tax Credit for small business firms includes the following components stated in 2013 dollars:
1. A $3,300 per person tax credit for existing employees. This credit would be limited to35,000 for a sole proprietor and70,000 for a corporation.
2. A $4,300 per person tax credit to employers for hiring additional people. This credit would be6,500 per person where individuals hired are under 20 years of age. Such credits would be limited in amount for each employer to50,000 per year for a sole proprietor and250,000 for a corporation.
3. A $2,300 maximum tax credit per person to provide a Workshare Bonus to employees who work short weeks and thereby spread available employment.
4. An $8,500 maximum tax credit for self-employed individuals to help facilitate self-employment.
5. A $2,200 per person training credit to employers who participate in training programs to improve job related skills of employees.
6.A $2,200 credit to corporations to match or stimulate expanded equity ownership by employees.
Unemployment is one of the most urgent problems we face today. The tax incentives in the Human Investment Tax Credit Program could easily be fine-tuned and voted into law as a bi-partisan measure to reduce unemployment. This should be the first order of business for the new Administration and Congress.
This is a rifle shot approach aimed specifically at quickly lessening unemployment without contributing new inflationary pressures. A package of carefully crafted “carrots” would create up to 6 million additional jobs in the small business sector with an additional 1 to 4 million becoming self-employed. Thus, generating a small business employment reservoir, rather than Government as an employer-of-last-resort.
If the Human Investment Tax Credit Program is updated and implemented, providing a comprehensive attack on the root causes of both unemployment and inflation, it will stimulate the economy and provide hope for millions of jobless or underemployed Americans.
Unemployment should be viewed as an imbalance of the market situation. Present policies speak of creating jobs without taking into consideration the obstacles facing employers. There is no possible way that large businesses or the Government can solve the employment problems of millions of people located in America’s diverse neighborhoods and communities. The employer-of-last-resort should not be the Government, but the millions of Americans who comprise that huge reservoir called “small business.” Here is the perfect small business opportunity to hire and train youth and new people.
A policy objective should aim at overfull employment (2 percent unemployment, which was attained during WWII) under conditions of price and monetary stability. The method to do this lies in making it financially worthwhile for more people to become employers, while at the same time strengthening those who now exist.
For an updated version, see: HUMAN INVESTMENT at www.aesopinstitute.org
A proposed Capital Homestead Act has been drafted by the Center for Economic and Social Justice to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. This will broaden private, individual ownership of our future capital wealth. Every man, woman and child would establish a Capital Homestead Account at their local bank or credit union to acquire a growing stock portfolio that pays dividends. This Super-IRA will supplement income from work and all other sources.
The Human Investment Tax Credit Program, together with the Capital Homestead Act, are two pieces of legislation with the potential to help eliminate poverty and provide essential income to all.
See SECOND INCOMES at www.aesopinstitute.org
Congress should pass both new laws without delay.
They can help us create the most genuinely free society in human history.
Mark Goldes has proposed a REAL solution, which combines JOBS CREATION and OWNERSHIP CREATION.
Democrats and Republicans need to represent the well-being of ALL Americans with a priority on strengthening the economy and significantly generating income for ALL Americans.
Most Americans are not earning enough income to properly support themselves and their families. The country is experiencing a widening divide between an elite income class with well-paid salaries and dividend and capital gain income from stock ownership and low-pay wage earners and those dependent on taxpayer-supported government welfare funded by extracting taxes and incurring national debt. This situation will continue to worsen. Americans need to WAKE UP and realize that the FUTURE is one of technological unemployment. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. And as a result, most American incomes will decline, which will result in a downturn in the economy as there will be fewer and fewer “customers with money” to purchase the products and services society needs and wants. The result: no or significantly reduced opportunity for income.
This is the NEW REALITY! The obvious, logical solution is for people to OWN THE MACHINES and non-human means of production that result from technology.
This new reality is the result of technological innovation and invention, tectonic shifts in the technologies of production, and an obsolete union movement stuck in job creation and “more pay for less work” instead of bargaining for employee ownership and increased incomes resulting from dividends earned as stock owners in corporate America.
This can be accomplished by applying the logic of corporate finance, which is self-financing and asset-backed credit for productive uses to grow the economy. People invest in capital ownership on the basis that the investment will pay for itself.
There is a solution, which will result in double-digit economic growth. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. As well national debt needs to be focused on growing the private sector of the economy simultaneously with facilitating private, individual ownership of FUTURE productive capital formation. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to build wealth and become “customers with money.” The proposed Capital Homestead Act would produce this result.
The fundamental economic solution is to create income for EVERY American by simultaneously broadening private, individual ownership of FUTURE productive capital economic growth and fully paying the profit dividends to the new American owners of the income-producing capital assets of our corporations.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
