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Tuesday, December 14, 2010

Romney states tax deal is wrong; jobless should pay for unemployment benefits

Governor Mitt Romney of MAImage via Wikipedia
Former Mass. Gov. Mitt Romney
believes unemployment benefits
should be paid for by workers in
advance to laid-offs; but they
already are.
Former Republican Governor of Massachusetts and likely 2012 President Candidate Mitt Romney wrote an op-ed at USA Today, in which he comes out against the compromise to extend tax cuts in HR-4853-'The Middle Class Tax Relief' act and extending federal unemployment benefits.

Romney believes that not enacting the tax cuts on a permanent basis, leads to business uncertainly on when to hire and expand operations.

“Because the extension is only temporary, a large portion of the investment and job growth that characteristically accompanies low taxes will be lost”, Romney wrote. When entrepreneurs and employers make decisions to start or expand an enterprise, uncertainty about tax rates translates directly into a reduced propensity to invest and to hire” he wrote.

Since the tax cuts are not permanent, Romney cites the deal is not good for the economy as an whole. He also wrote that although being understanding of unemployed job seekers efforts to find employment, the current jobless compensation system needs restructuring.

“Nonetheless, the vital necessity of providing for those without work should not be used as an excuse to ignore the very real problems of our unemployment system”, Romney stated.

Romney suggests a "redo of jobless benefits" to deal with the problem by requiring recipients to pay for their own unemployment benefits.

“To remedy such problems we need a very different model, perhaps establishing individual unemployment savings accounts over which employees would exercise direct control when they lose their jobs, or putting in place financial incentives for employers to hire and train the long-term unemployed”,  Romney suggested.

Employees do pay for a portion of their unemployment benefits though a payroll tax that is spilt with their employer. Specifically, when an employee works, a certain amount of funds are diverted into the unemployment compensation insurance program.

Thus, similar automobile, health and home insurance, when a claim is file, the benefit is reimbursed. In the case of unemployment, the former worker must be laid-off by no fault of their own to file a claim with their state jobless agency.

Former Governor Romney does not in his OP/ED provide specifics on how his proposed "unemployment savings accounts" would work.

The HIRE act, signed on March 18th by President Obama addresses Romney written statement on providing financial incentives for employer to hire the long-term unemployed. The program $17.5 Billion cost, included a $1000 tax credit when a long-term jobless employee is hired and provided a payroll tax exemption of the employers share of Social Security taxes on wages paid to these workers after March 18, 2010.

In addition, the act permits small business owners to write off equipment investments of up to $250,000 this year, instead of taking years to depreciate. This in a doubling of the previous amount of $125,000

You can read Former Governor Romney entire op-ed online at USA Today.

What are your thoughts on this article? Do you believe with Former Governor Romney's position or  does he need to study up on current laws, like the HIRE ACT before writing OP/ED's? Feel free to comment on this story, below!
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