Tax credits for paid time off?

[eridani]

http://www.truthout.org/033109A

This paper briefly outlines a method for Congress to quickly boost demand in the economy, while at the same time promoting important public ends: an employer tax credit for paid time off. This paid time off can take the form of paid family leave, paid sick days, paid vacation, or a shorter workweek. This tax credit can both provide short-term stimulus and also provide an incentive to restructure workplaces in ways that are more family friendly. It is possible that many workplaces may leave in place changes made to take advantage of this tax credit even after it has expired.

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The net cost per job on this policy ends up being considerably lower than other forms of stimulus. If the stimulus increases GDP by $190 billion (as discussed above), then this should lead to an increase in tax revenue and reduction of transfer payments (e.g. unemployment insurance) of approximately 25 percent of this amount, or $47 billion. This leaves a net cost of $78 billion ($125 billion minus $47 billion).

If the policy creates 3 million jobs at a cost of $78 billion, then the net cost per job is $26,000. This compares very well with other forms of stimulus being considered.

A paid time off tax credit also has the advantage that it can take effect almost immediately and would require very little bureaucracy or oversight. Direct government spending, for example on health care or infrastructure, directly increases employment and provides a boost to the economy. However, President Obama's stimulus package has already pressed the limits in expanding many areas of government services. It would not be easy to substantially increase spending beyond the amounts appropriated in the last stimulus.