It's time for the good times
Forget about the bad times, oh yeah
One day to come together
To release the pressure
We need a holiday
-Madonna, in her hit "Holiday"
Carly Fiorina, channeling one of my favorite songs from the Material Girl, offered an admirably detailed prescription for countering job losses today during a roundtable discussion with businesswomen in Beverly Hills. In pledging to "fight for every job," Fiorina said she sees great value in tax holidays -- that is, a set period when businesses or individuals are excused from paying taxes.
She proposed three such holidays:
1. A two-year payroll tax holiday for small businesses and start-up businesses that hire unemployed workers.
2. A five-year tax holiday for start-up businesses and business expansions.
3. A 10-year tax holiday for business facilities that "repatriate" -- that is, return to the U.S. from overseas.
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Will these work? There is extensive literature and debate in economic circles about the value of such holidays. (Briefly, some economists believe tax holidays, if well-designed, can spark long-term growth, while other see them as being excessively costly measure that don't create business investment--but instead merely change the timing of such investment).
What's intriguing politically is that Fiorina seems to be sending a mixed message here. Such tax holidays are a classic form of economic stimulus. In fact, a payroll tax holiday (albeit one that was significantly scaled back during legislative negotiations and is less ambitious than the one Fiorina seems to be proposing here) was part of the federal stimulus package supported by Democrats and President Obama. Fiorina has made the stimulus package a focus of her attacks on her opponent, the incumbent Democrat Barbara Boxer.
As she made the case for these holidays, Fiorina sat in front of poster boards that criticized Boxer for job losses since the stimulus package passed.
