Joe Brezinski is one of those workers who are fired and are worried about losing their house. They’ve formed worker’s political action committee called Campaign for Job Security. How can fiscal policies can help the workers like Joe? There are several actions that the government can implement to solve this problem.
The unemployment rate is 12.5% and the inflation rate is 9%. Joe Brezinski is part of that unemployment rate and is suffering from high inflation rate. To satisfy the workers of Campain for Job Security, the government can implement strict fiscal policy by taxation.
The government can impose 30% increase in taxation for all businesses. However, they can cut the taxation to 0% for those firms that are willing to employ a large number of people. This way the government can get the unemployment rate down to 1~0%.
The government should also decrease the amount of government spending to reduce the debt and deficit. Also, they should pressure the foriegn firms to invest on factories and technology to boost up the domestic aggragate demand.
So adjusting taxation for businesses according to how many people they employ will be a great help to the unemployed workers like Joe!