How Obama's Taxes Are Killing Jobs And Failing To Stimulate The Economy

We start with the AP, of all places:

As if small businesses needed another reason not to hire, consider their latest financial burden: The cost of rising unemployment itself.

Employers already are squeezed by tight credit, rising health care costs, wary consumers and a higher minimum wage. Now, the surging jobless rate is imposing another cost. It's forcing higher state taxes on companies to pay for unemployment insurance claims.

Some employers say the extra costs make them less likely to hire. That could be a worrisome sign for the economic recovery, because small businesses create about 60 percent of new jobs. Other employers say they'll cut or freeze pay.

This is because of the federal government, of course:

Federal law requires states to build up unemployment insurance trust funds in good times so they can pay benefits during downturns. The idea is to avoid having to raise taxes or cut benefits in a recession.

But the severity of this recession has bankrupted many states' trust funds and forced them to borrow from the federal government. States eventually must pay back the loans. Otherwise, the federal government can raise taxes on their businesses.

Hot Air explains:

The problem here isn't so much the disincentive conservatives claim unemployment benefits provide, which "funemployment" stories tend to propagate. Anyone who has spent any time on unemployment benefits understands that they do nothing to encourage people not to work; they are not even subsistence wages. The problem is that extending unemployment benefits takes capital out of the hands of people who create jobs, and puts that capital in the least-efficient hands possible: the government.

The result? Exactly what we see here. The government not only has sucked capital out of the private sector to fund unemployment benefits, the Democrats have sent signals of massive tax increases in the near future in order to pay for Porkulus and the statist Democratic agenda.

Heritage posts a real life example:

A lot of people — including a lot of business owners — don't understand how this works. Because the government cuts the unemployment check, it is widely assumed that it's the government that pays the unemployment benefits. In reality, those benefits are funded by employer taxes. And here's the killer: The more unemployment benefits your former employees collect, the higher your taxes go.

It works like insurance. If the government pays a claim, your rates go up. In fact, if your former employee collects $10,000 in unemployment payments, you can expect to pay close to twice that in increased premiums. At least that's how it works in my state, Illinois.

Thus, this becomes another cost of doing business that smart owners attempt to control. How do you control it? By making as few hires as possible, by making sure that those hires you do make are as strong as possible, and by combining documented rules with good management.

And now, thanks to the stimulus package, unemployment insurance has been extended as much as an additional 20 weeks. If you've had to lay off 10 people, this could easily result in additional taxes of $10,000, $50,000, or even $100,000. It's a time bomb that won't go off until after employers get their contribution-rate increase in November, but it will go off.

And therein lies the final irony: Even after the economy improves, I'm going to think long and hard before I hire anyone. Thanks to the stimulus package — the stimulus package — the costs, paperwork, and legal exposure associated with hiring employees is on the rise.

Thank you, Mr. President.

There's my two cents.