ATTENTION: Tax credits for hiring veterans will not work.

Discussion in 'Economics' started by KINGOFSHORTS, Nov 11, 2011.

  1. Here is the simple economic reason why this will not work and it is just an empty political feel good ploy.

    #1 If your company has excess capacity and slack demand for your goods and services. Then you have no need to hire any employee.

    #2 It makes no sense to hire an employee just to sit there doing nothing. You will spend much much more on the employee salary and benefits over the measly tax break.

    MATH problem

    John has a factory that makes condoms, he sells 500 condoms a day but 5 years ago he sold 2500 condoms a day so John has excess capital equipment sitting idle.

    If every employee working the condom making machine can push out 100 condomsa day per employee and each employee costs 10,000 dollars a year. how many employees does John need now, factoring in demand for 500 units a day?

    Assuming John sells 182500 condoms a year for a gross price of 1 dollar. What is his profits after factoring employee costs?

    If the dumb politicians promise a 1000 dollar tax cut for every employee, how many employees will john hire?

    Would John make more money or less money hiring 5 more employees to collect the 1000 dollar tax credit per employee?