A Tax for New Jobs?
In an effort to gain enough support for President Obama’s job creation bill, Senate Democrats proposed an addition to the bill: a new 5.6% surtax on people who earn more than $1 million per year. The tax would go into effect in 2013; its main purpose is to help pay the $447 billion price tag for the president’s jobs plan.
Currently, unemployment is bad, the job market is tough and the jobs plan is supposed to help. Democrats hope that finding a way to fund it without adding to the deficit will make it more politically palatable. (Although there’s debate about this proposed new tax in Congress, 67% of Americans are actually in support of raising taxes on people with even less—$250,000—in order to reduce the national debt.) As of now, it’s still unclear whether the plan will pass.
Employment numbers, like the unemployment rate, are helpful in assessing the general state of the economy, though an economy isn’t necessarily in the dumps simply because there’s some unemployment. Historically, the “healthy” rate of unemployment has been considered 5% … but right now we’re hovering above 9%.
Yep, there is such a thing. According to this economic theory, unemployment that’s too low could contribute to wage inflation. In other words, if there were tons of jobs and not a lot of people looking for work, employees could demand ridiculously high wages, maybe even higher than what’s fair or healthy for the economy.
Of course, high unemployment means a lot of people without jobs—and on a larger scale it can mean a slowdown in consumer spending and economic growth. It’s no secret that high unemployment has the tendency to cause widespread discontent and hardship. Just look to the current Occupy Wall Street protests for proof.
There’s also no question that the current unemployment rate is high, and we’re feeling its effects both in consumer spending rates and on the ground. Right now, the legislation is holed up in Congress; we’ll be watching to see what happens, and—if it passes—whether it helps the millions of Americans who are currently unemployed.
If That’s You …
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