A Tax Cut Worthy of a Worker’s GOP

Published May 2, 2018

American Greatness

Republican Congressional leaders are talking about voting on a second tax cut bill later this year. The tax cuts passed last year were made permanent for corporations but will expire in 2025 for individuals. The leaders’ proposal would make the personal income tax changes permanent, too.

This is much too timid. Americans worry that the massive windfalls from cuts secured for corporations will simply go to their shareholders or be shipped overseas. A new tax cut bill should include a provision that encourages businesses to hire American workers. This would both tilt the playing field a bit toward labor when competing for the tax cut dollar and show Americans that their jobs are the GOP’s primary concern.

My idea is simple: give businesses a tax credit for each person legally able to work in America they bring onto the books in a given year. This credit, which reduces the employer’s tax bill on a dollar for dollar basis, would come on top of the current deduction the employer gets for the compensation they pay to that employee.

This could come in many forms. The credit amount could be adjusted up or down depending on how much one wants to spend; one could also adjust the amount of the credit so that an employer receives a bigger credit when he hires someone with a smaller expected annual salary, targeting assistance to the lesser-skilled. The plan could even exclude very large employers, so only small and medium-sized businesses would get the credit. All of those ideas are mere details designed to hold down cost and target help to those who need it most.

The key is that this credit sends a message: jobs for Americans come first.

The sharp reader will be asking a question about now. How, she might ask, would the employer know the worker is really an American or a legal immigrant? That’s a valid point, but it could be addressed by conditioning its receipt upon federal government verification that the proposed employee is in fact a citizen or legal alien. That means employers who want the money would have to participate in e-Verify.

E-Verify is currently voluntary, and consequently most employers never use it. Since there are no penalties for failure to use it, many employers simply take the documents their prospective employees present at face value. Too many of these documents are forged, meaning that people here illegally deceive their employer, who has little incentive to look deeply into the matter given how rarely immigrations agents look into small business hiring. The result: a continuing demand for illegal labor.

This proposed credit would give employers a carrot instead of a stick. Many small businesses cycle through labor during the year and run on small profit margins. Giving them one or two thousand dollars per legal hire would make a big difference to their bottom line. On the margin it would make their lives easier, and therefore, slowly, it would increase the number of jobs taken by citizens or legal immigrants.

Some people might say that many of these jobs are ones Americans just don’t want, but it is more likely that Americans just don’t want those jobs at the wages currently offered when competing with illegals or given the alternatives for which they can qualify in federal or state programs. The credit and business tax cuts would increase the pool of money available to increase wages for citizens or legal immigrants to something they might find attractive. A $2,000 per employee credit, for example, would allow an employer to pay a full-time worker an extra $1 an hour over what could be paid to an illegal immigrant. If that’s not enough, then the employer could use some of that big fat business tax cut which was supposed to fuel employment and growth.

Many orthodox Republicans might howl at this, but think of the position in which it puts Democrats. Democrats complained the corporate tax cuts wouldn’t go to workers; this provision encourages that to happen. Democrats also say they oppose immigration enforcement that break ups families; here’s a way to slowly cut off the funds that allow people to live here illegally to begin with. If they can’t find work, they go home on their own: the law gets enforced without trauma or violence. Unless they want to say that the law shouldn’t be enforced at all, then they have go along.

Donald Trump won because he gave millions of Americans hope again. He told them that they wouldn’t be left behind, that they would have a place in America’s future. His economics was blurry and remains so, but one can always sense that he actually wants Americans working, saving, and building again. Provisions like these put flesh on the skeleton Trump provides and allows us to build a rational economic nationalism open to all. Some supply-siders might ask “why?” but I ask “why not”? Americans want, need, and deserve action like this. It’s time the GOP gives it to them.

Henry Olsen is a senior fellow at the Ethics and Public Policy Center, a think tank in Washington D.C. He is also an editor at UnHerd.com where he writes about populism and politics around the world. He is the co-author, with Dante Scala, of The Four Faces of the Republican Party (Palgrave, 2015) and is the author of The Working Class Republican: Ronald Reagan and the Return of Blue-Collar Conservatism (HarperCollins, 2017).

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