Wednesday, March 20, 2013

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"The French don't care what you do, actually, so long as you pronounce it properly." -- Prof. Henry Higgins

   Which is better, a tax credit or a government grant?

   Some favor tax credits, but oppose government grants. Why? They maintain tax credits encourage private enterprise, while government grants represent government spending. Put another way: Corporate spending = good. Government spending = bad.
   One "saves" money because government is not spending it, while the other "saves" money for the private sector because it does not go to the government. Both, however, encourage economic growth, and the bottom line is that government doesn't get to process the money. Either the government doesn't get the money in the first place (tax credit), or the government gets the money and then spends it (grants).
   So it's a fiscal wash.

   Meanwhile, more people have jobs. Granted, this includes those on a government payroll who administer the program, but a job is a job, and to an economist, that's a bottom line goal.
Some would argue that a private sector job is better than a government job, but tell that to someone who has no job at all.
   Or tell it to teachers, police, firefighters, and prosecutors, as well as federal, state and local representatives and staffers, forest rangers, military personnel, or the myriad other employment categories, including medical and support staff at public hospitals, providing employment that pay wages spent on food, clothing, shelter, entertainment and luxury purchases as well as necessities, all of which keep the general economy rolling.
   Or tell it to those who remember the Great Depression of the 1930s, and had government jobs building roads, bridges, libraries, museums, hydroelectric dams and other projects that got the economy moving again.
   To say that government spending is bad often means government jobs are bad, and only private sector jobs are good. An understandable attitude, if you are senior management of a corporation looking to keep as much for yourself and your stockholders as you can.
   But in economic bad times, senior managers typically don't go out of their way to help the unemployed. More likely, they increase the number of unemployed.

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