What is the difference between a good idea and a bad idea? Sometimes the difference is slim. When it comes to tax policy, something that sounds good can still be a failure.

Last week, President Obama announced he would put forward a new plan to encourage job growth at the beginning of September. Some of the details have already leaked to the press. At the top of the list are tax cuts for companies that hire new workers. Most likely this will be done by giving employers a break on the payroll tax for each new employee hired.

This has been tried before. We only have to look at past examples to see that there are better ways to provide a tax break to employers.