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Startups are America’s job engine, so give workers tax credits

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Re: Startups are America’s job engine, so give workers tax credits

#41

Post by maxerickson »

jnordwick wrote: post #34
maxerickson wrote: post #32

Earlier quoted context omitted.

A considerable portion of the US sees government spending primarily through the lens of direct morality. So hand wavy concerns about undermining the virtue of work end up blocking spending with clear long term net benefits.

But the EITC adds to the virtue of work. It actually increases they payment for your salary increasing (to a point obviously). It straight supports the philosophy the more you work the more you should get paid. I think the problem might be that it is too well liked by both sides and neither side is willing to give the other a win, even if it a win for themselves too. I hate politics.

The hand wavy concern is about any government transfer.

Re: Startups are America’s job engine, so give workers tax credits

#42

Post by lr4444lr »

twoodfin wrote: post #9
specialist wrote: post #7

Whereas $6000 is a nice (modest) incentive, the lack of universal health care is the greatest barrier to entrepreneurship. Especially for parents (and wannabe parents).

If that were the greatest barrier, wouldn't nations with universal health care see higher rates of entrepreneurship? I don't have numbers, but at least anecdotally it doesn't seem to be the case. Is the U.K. startup culture particularly impressive?

No, there could be other barriers in those other countries. The article is clearly US-centric.

Re: Startups are America’s job engine, so give workers tax credits

#43

Post by maxerickson »

evanpw wrote: post #40
maxerickson wrote: post #32

Earlier quoted context omitted.

A considerable portion of the US sees government spending primarily through the lens of direct morality. So hand wavy concerns about undermining the virtue of work end up blocking spending with clear long term net benefits.

Up to a certain point, EITC payments increase as income increases, so it actually encourages work among low-wage employees. (Of course, it phases out at higher incomes, which discourages work).

Yeah I understand how it is structured. It really mostly supports up to 2.3 children.

The max credits, from https://www.irs.gov/credits-deductions/individuals/earned-in...

    $6,318 with three or more qualifying children
    $5,616 with two qualifying children
    $3,400 with one qualifying child
    $510 with no qualifying children
The point is that lots of people see it as a negative because it is a government payout.

Re: Startups are America’s job engine, so give workers tax credits

#44

Post by zyx321 »

pembrook wrote: post #15
twoodfin wrote: post #9

Earlier quoted context omitted.

If that were the greatest barrier, wouldn't nations with universal health care see higher rates of entrepreneurship? I don't have numbers, but at least anecdotally it doesn't seem to be the case. Is the U.K. startup culture particularly impressive?

Yes they do. However, the cultural and business environments in European nations are often different so it's not a perfect comparison. For example, in most countries you can't just start taking payments and call yourself a "sole proprietor." Creating a business involves money and time which can also be a deterrent. A better study that could represent the effects it would have in the US looked at rates of entrepreneur…

>For example, in most countries you can't just start taking payments and call yourself a "sole proprietor."

You could, if you wanted. The problem is that you can easily end up six or seven figures in debt if you fail. Having some sort of protection in the form of an LLC or GmbH is generally preferrable.

Re: Startups are America’s job engine, so give workers tax credits

#45

Post by lend000 »

stiva wrote: post #19
lend000 wrote: post #17

Earlier quoted context omitted.

Not a negative income tax with a flat rate above/below a threshold. The tax that hurts the poor the most is obviously the sales tax.

> The tax that hurts the poor the most is obviously the sales tax. Right, which is a flat, or proportional, tax.

It's not really proportional, which is why it hurts the most. Wealthy people (who don't buy extravagant things) have most of the same basic expenses as the poor, and the sales tax can really be seen as a regressive income tax that eats up a larger portion of the income of the poor.

Re: Startups are America’s job engine, so give workers tax credits

#46

Post by peterwwillis »

Instead of this tax credit for the already-middle-class, why not raise the standard of living in poor areas by investing in education, food security, health care and jobs in those areas? If it works, you raise the poor up to the middle class, reduce dependence on government subsidies, and grow the economy.

Let's say you start a business in a poor neighborhood. If you hire locals you're by default investing in the local community and the local economy can grow. If you hire outsiders, they can come into the city and help new services start that will serve the needs of the workers, which will provide a limited impact on the local economy.

If you provide assistance for education/job training, food assistance, daycare and healthcare, the local community can gain the advantages they need to get jobs. But if the jobs aren't local, they usually need major investments in public transit, so IMHO it's better to invest in local small businesses in these areas.

So perhaps this $6,000 credit isn't a bad idea, but spend it where it really counts: poor cities and neighborhoods whose local economy could use it the most.

Re: Startups are America’s job engine, so give workers tax credits

#49

Post by cbhl »

snarf21 wrote: post #26
cbhl wrote: post #6

Canada has a refundable tax credit that many startups take advantage of, known as SR&ED. https://en.wikipedia.org/wiki/Scientific_Research_and_Experi... The one caveat is that you have to spend money (and keep good books) in order to be eligible for the tax credit.

This is interesting but I've always thought we should do it in such a way where someone could take say $100K out of their 401K to start up a business. This money is sitting right now and doesn't help grow the economy. The company would be eligible for tax credits if the company fails at a lower rate and spread across five years. So say you and a partner start a company and document the percentage of this money that i…

In my mind, the simplest way to lower the risk is to just hand people the money they need to meet their needs (rent, electricity, food, internet). So maybe SR&ED could go away altogether if the UBI experiments are successful.

If you consider those who drop out of college to do a startup, those people wouldn't even have $100k in a 401k to take out to start the business.

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