Paul L. Caron

Monday, July 27, 2020

NY Times: Trump Wants A Payroll Tax Cut, But Few Others Do

New York Times, The Tax Cut That Trump Wants, but Few Others Do, Explained:

President Trump badly wants to cut the payroll tax. Hardly anyone in Congress shares his enthusiasm.

From the early days of the coronavirus pandemic sweeping the United States, and plunging the economy into a sharp and brutal recession, Mr. Trump has been pushing Congress to temporarily eliminate the taxes American workers and their employers pay to help support Social Security and Medicare. ...

Most economists, even conservative ones, do not rank a payroll tax cut anywhere close to the top of their list for best ways to support and stimulate the American economy as it struggles to climb out of the recession. They say it will cost a lot in lost tax revenues, while doing little to induce hiring — and excluding millions of unemployed workers from its benefits. A broad cut would heavily benefit people who still have jobs and are earning six-figure salaries, which is not the group that is most in need of federal support right now. And it would cross into the political danger zone around funding for a pair of safety net programs that remain highly popular with the American public.

Wall Street Journal, Trump’s Payroll-Tax-Cut Plan Proves a Hard Sell:

Mr. Trump’s basic argument—lower payroll taxes reduce hiring costs and put money in workers’ pockets—is correct, economists say. But they add that there are more efficient ways to accomplish the same goals and warn that the coronavirus pandemic, not tax policy, is the main barrier to hiring and growth.

“Directionally, it’s not a crazy answer,” said Jesse Rothstein, a professor at the University of California, Berkeley and a former Labor Department chief economist during the Obama administration. “There’s just no scenario where the tens of millions who are on unemployment insurance right now would have jobs if it were a couple of percentage points cheaper to hire them.”

Washington Post, White House, GOP Kill Payroll Tax Cut

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