Here’s a little secret: Most tax preparers don’t completely understand these credits and certainly taxpayers are really clueless. They may be aware of the Adoption Credit or Energy Efficient Appliance Credit, but who would know about the Carbon Dioxide Sequestration Credit or the Indian Employment Credit? Would that be for hiring Native Americans or people from India? Many Americans – who call their credit card company or need help with their computers – probably think we hire too many people from India already.
Many Americans would like to claim the Distilled Spirits Credit, but unfortunately moonshine has been outlawed. Or how about the New Markets Credit – what is that about? Is that for opening a new Safeway or Kroger’s or maybe a Trader Joe’s? I am confused about the Orphan Drug Credit. Can you still take the credit if you adopt the drug? Is there an orphanage from which to pick these drugs?
Some of these credits appear to have outlived their original purpose. I mean why is there still a disabled access credit? The Americans with Disabilities Act was passed almost 20 years ago. You would think that everyone would have gotten the hint by now that they must make their buildings or equipment accessible to disabled individuals. Why are we still handing out money to do that?
Tax credits are not the answer; they are just another government handout. A growing economy that creates private-sector jobs comes from a policy of stable, predictable, low tax rates and limited, responsible regulation. If people have a job and can earn enough money to buy a home and make a monthly payment, do they really need a homebuyer’s credit? And would they have replaced their old car with a new one without wasting billions of taxpayers’ dollars?
This administration hasn’t the slightest clue how to create private-sector jobs and encourage economic activity. They don’t understand that predictable costs are a precursor to entrepreneurship and business expansion. Currently, employers have no idea what their health care costs will be or what liabilities they will be facing from the cap and trade bill. They don’t know whether payroll taxes will increase or whether they will have higher corporate taxes. With the huge government deficits, they have to be concerned about the value of the dollar in the coming years. They see these expensive government programs being promoted and they fear what comes next.
As Mr. Obama calls a national summit on job creation he needs to heed these facts. No amount of new tax credit programs will alter our behavior sufficiently to lower the current horrible level of unemployment. The people who will benefit are the CPA’s who have to figure them out and the people who establish new industries to take advantage of these new credits. Of course, the charlatans and the criminals will always be there as well.
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