tax credit

The 13th Worker

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Remember all of that fuss to pass a tax credit to hire workers?

A new report shows the health insurance tax credit sliding scale causes small businesses to not hire.

The Hill:

Using insurance premium cost projections supplied by the nonpartisan Congressional Budget Office (CBO), the study states that the credit reaches its optimal point at 13 workers, with relief peaking at $36,400 for qualifying business.

After the 13th worker the economics surrounding the credit change, the study says.

For employers with 15 workers, taking on an additional hire will reduce the credit by $1,400. For a company looking to expand from 20 to 21 workers, the credit will shrink by $3,733. And businesses will take a $5,600 reduction on the credit when hiring the 25th worker.

The credit phases out for companies with at least 26 employees.

Ah, the irony. Lucky 13 again. Here is the original hire tax credit:

First-time home buyer tax credit

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The pending home sales numbers shot up today. But like the cash-for-clunkers program effecting the ISM numbers, another expensive federal program is boosting these numbers.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007 when it was 100.7.
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NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.

It makes me wonder two things: