White House Preparing for a Payroll Tax Holiday?

[babylonsister]

White House Preparing for a Payroll Tax Holiday?
By Annie Lowrey 9/2/10 6:35 PM


At The Washington Post, Lori Montgomery has details on a possible White House stimulus plan comprised entirely of tax cuts:

Among the options are a temporary payroll tax holiday and a permanent extension of the research and development tax credit, say people familiar with the talks who spoke on the condition of anonymity in order to describe private deliberations. Permanently extending the research credit would cost roughly $100 billion over the next decade, tax experts said. And depending on its form and duration, a payroll tax holiday could let businesses keep more than $300 billion they would otherwise owe the Treasury.

While significantly less than last year’s $814 billion stimulus package, both ideas would be far more dramatic than anything the White House had been expected to propose.

Economists argue that spending increases tend to be more effective than tax cuts in stimulating the economy. But, the Congressional Budget Office examined (PDF) the effectiveness of a variety of tax cuts this winter, and found payroll tax cuts to be a good option, compared with, say, extending tax cuts for the wealthiest Americans. Moreover, they have positive impacts on employment — and the sustained high rate of joblessness remains the biggest drag on the American economy and a pressing public-policy issue.

more...

http://washingtonindependent.com/96605/white-house-preparing-for-a-payroll-tax-credit

[customerserviceguy]

1. Well, this ought to deplete Social Security even further

It's already taking less in than it pays out right now, this should really drive it into the ground.

[budkin]

3. I believe they are talking about the income tax portion, not the SS contribution

[golfguru]

8. Nope, they are talking about SS, not income tax.

[budkin]

2. That would be awesome

[denimgirly]

4. Seriously, do Tax Cuts ever work? And who is paying for all this?

Geez..enough with the tax cuts

[FrenchieCat]

5. This would seriously help those who make minimum wage,

and still have to pay 7.65% of their wages in payroll taxes.

Those kind of tax cuts would work.

[pa28]

10. Depends on the tax cut.

A payroll tax holiday will have the most benefit for lower end filers. Capital gains have been getting a free lunch for decades now.

If a holiday needs to be "paid for" let's have a long overdue increase on capital taxes.

[MadHound]

6. When will we admit that tax cuts are simply bad economic policy.

It has been known for a long while that tax cuts are the least effective form of economic stimulus going, but we keep coming back to them again and again like moths to a flame.

[pa28]

7. Outstanding.

A tax holiday would be a two for one benefit. Direct stimulus to the economy and a boost to political fortunes.

The time for a bold move is right now.

[newthinking]

9. So let's choose one of the few forms of stimulus that leaves the unemployed out

Nice bonus for those who are employed. Sure it will add some spending to the economy. But I thought the idea of stimulus was all about jobs, and this is one of the least job producing forms. This would be a freaking bribe for votes with the added effect of further reinforcing bad Republican ideology.

[Inuca]

20. Jobs are created when

people spend money.

[Clio the Leo]

11. It may be a band aid on a hatchet wound but if it can buy the Dems some political capitol....

.... I'll take it.

[Beartracks]

12. This is Payroll Tax, not Income Tax.

As noted, it would let businesses keep more than $300 billion they would otherwise owe the Treasury. I don't THINK this would affect workers' paychecks at all, would it?

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[paulk]

13. not as I understand it

it looks like the whitehouse is once again letting the Republicans dictate policy - in that the repukes would be hard pressed to oppose this, since it is basically a republican plan...


this is just more trickle down economics

[Beartracks]

14. At least the trickling starts a little closer to the people.

But I see what you mean. There's no guarantee business won't just bank the savings to help tide them over when the tax holiday ends. But I guess it might help them meet payroll, keep some people employed.... :shrug:

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[paulk]

15. will businesses hire more people if no one has the money

to buy their product or service? That seems to be the problem, imo. You need to approach this from the opposite direction - putting money in the hands of people who will spend it. If demand rises, then companies will hire more people to make or provide their product or service to meet that demand.

This proposal is nothing more than election year politicking - an attempt to put Republicans on the hot seat - it will do very little to stimulate the economy, imo.

Why not propose something really big? A new WPA - a new program aimed at rebuilding our infrastructure? The repukes are going to oppose it anyway, so why not go all in? The timidness of the Obama administration is frustrating -

[TomCADem]

16. K & R!

Let the tax cut for the rich expire and pass the payroll tax cut.

[michreject]

17. This would only help those who have a job

and collect a paycheck. What about those who are collecting a pension/SS/unemployment?

[IndianaGreen]

18. Back in 2009, White House should have frozen foreclosures and rolled back interest rates

on credit cards.

Right now the White House is like the Captain of the Titanic realizing he didn't have enough lifeboats for the passengers.

[madinmaryland]

19. Is the payroll tax they are referring to the one that businesses collect from

the employees and then forward it to the government?? So will the corporations stop collecting it from the employees?

:wtf:

[Kurt_and_Hunter]

21. I think it is only the 1/2 the employer pays

[madinmaryland]

22. Hmmm. So the employer gets their money back, but not the worker

who could actually pour the money back into the economy. Yeap. The business owners will just take a fucking vacation to Europe. Wonderful help to the economies of the nations overseas.

Douches.

[flpoljunkie]

23. Laura Tyson and Mark Zandi were talking about a partial payroll tax on Face the Nation today.

Which probably means this is what the Obama administration is considering. By 'partial' they mean the part the employer pays to the government and it would also be temporary, altho they did not give a time frame. The employer pays 6.2% and the employee pays 6.2% of earnings. The cap for 2010 is $106,800. Above that, no payroll tax is deducted from the employee or paid by the employer.