President Trump is confident that the United States will rebound after the economic collapse brought by the coronavirus pandemic. With nearly forty million Americans out of work, unemployed workers are looking for reforms. This economic meltdown puts an incredible stress on the federal government, which is now tasked with employing those who are in desperate need of work.
Granted, the Dow Jones index has bounced back from its two-year low hit in March, and the S&P 500 has also made an impressive transformation since the height of the pandemic. However, despite the stock market’s impressive rebound from financial turmoil, unemployed workers are begging to go back to work—yet President Trump’s reforms are struggling to bring back jobs.
A fundamental feature of the President’s two trillion dollar CARES Act grants temporary payroll tax cuts to employers. These reprieves encourage corporations to hire more employees without the liability of taxation. Such a plan eliminates the 7.25% tax on a company’s gross payroll. By eliminating this fee, employers are incentivized to hire more workers while saving money on taxes. However, the CARES Act lasts until the end of the year.
President Trump not only plans to continue the CARES Act until the end of 2020, but he seeks to provide a tax cut for employees. The President is pushing for another tax cut that decreases Medicare and Social Security expenses for employees, freeing up capital that would otherwise never reach the hands of workers. Although more money is pumped into the economy as an employee’s net salary increases, these tax cuts fail to address one critical issue: the need for jobs in a failing market. Rather than using this excess profit to bring back jobs, this tax cut only benefits the employed. This plan will only give more money to employed workers, and thus fails to fix the US’s starving job market.
A payroll tax cut will not effectively help the unemployed, but rather the government can offer more incentives to companies that choose to hire more employees. These incentives should not only include payroll tax cuts, but decreasing corporate income tax rates can be the extra push that leads to a rapid opening of jobs. Corporate income tax rates can drop on a progressive scale as companies begin hiring more employees—this initiative will allow businesses to save money in taxes when they recruit larger work-forces. State taxes and property taxes, however, should be the last tax cuts made as these taxes fund public schools. Sacrificing the qualities of public schools will only bring a future workforce with fewer college graduates and fewer workers qualified for higher-paying, and more stable, jobs.
America’s economic bounce back can only proceed if employers make financial gains upon hiring a larger workforce. Until then, the federal government has a long way before the job market returns to its former glory. Despite Ivanka Trump’s recent comments regarding those out of work, it is not as simple as saying, “Find something new.”