decoding the payroll tax cut: how well does it work?

[xchrom]

http://www.nationofchange.org/decoding-payroll-tax-cut-how-well-does-it-work-1322836481

As Con­gress tries to deal with its long list of un­fin­ished busi­ness, among the top and most con­tentious items has been the pro­posed ex­ten­sion of the pay­roll-tax cut.

It has cer­tainly in­spired plenty of po­lit­i­cal pos­tur­ing. De­moc­rats have charged Re­pub­li­cans with hypocrisy for op­pos­ing a mea­sure that would put hun­dreds of dol­lars into the pock­ets of Amer­i­can work­ers; Re­pub­li­cans have fired back, ac­cus­ing Pres­i­dent Obama of failed eco­nomic poli­cies and mis­guided ef­forts to grant tax re­lief to some while up­ping taxes on the rich, who they say often cre­ate jobs.

But look­ing be­yond the rhetoric, how much has the cut helped the econ­omy? And what do econ­o­mists say would hap­pen if it’s not ex­tended? We run through the facts.

First, what is the pay­roll tax — and how big has the cut been?

Take a look at your pay­check, and it will be very clear: The tax is the part of your wages with­held for So­cial Se­cu­rity and Medicare.

[dtexdem]

1. Better to cut income tax rates for poor and middle class.

The payroll tax cut further restricts the growth of the Social Security Trust Fund -- our country's investment in our aging future.

And of course, any tax cut should be more than made up for through increased income tax (and other tax) rate hikes on the rich -- and not just the scheduled restoration to the pre-Dubya rates, either.

[xchrom]

2. +1

[ProgressoDem]

7. Well the payroll tax is really the bulk of what the poor pay at least.

There is truth to the Republican talking point that 47% pay no income taxes. Obviously that obscures the rest of the picture, that the poor have the payroll tax burden. Should cut payroll tax rate and eliminate the $106K cap.

[LonePirate]

3. It's interesting how the Rs constantly argue for tax cuts but they say this one didn't work

Their hypocrisy has reached a level of head-spinning not seen since "The Exorcism."

[joshguitar]

6. hypocrisy?

they re for tax cuts, just not for poor or middle class folks. this shit is ridiculous.

[zalinda]

4. A news reporter here, got an extra $10 in his pay check.

He went around and spent that $10 at the flea market. It certainly was a big joke to him.

zalinda

[Bill USA]

5. here's the quote from WaPo: without taxcut extension things will get a good deal worse.

"in terms of the larger picture, economic analysts have said that unless the payroll-tax cut and other short-term measures are extended, “fiscal drag will be intense in 2012.” Here’s The Washington Post:

Goldman Sachs economic forecaster Alec Phillips estimated that allowing the payroll-tax cut to expire would reduce growth by as much as two-thirds of a percentage point in early 2012. Macroeconomic Advisers estimates that it would reduce GDP growth by 0.5 percent and cost the economy 400,000 jobs by the fourth quarter.

Mark Zandi, chief economist at Moody’s Analytics, went a little further , estimating that if both the payroll-tax cut and extended unemployment insurance are allowed to expire, real GDP growth will fall by nearly a percentage point and about 1 million jobs will be lost by the end of 2012.

Ultimately, a simple extension of the payroll-tax cut means a continuation of what workers already have. That’s why economists and analysts talk less about any possible upside — such a boost to consumer spending — and cast it as a way to avert further damage to the economy."

[bemildred]

8. It's a little extra money in your pocket now, IF you have a job. nt