What about a payroll tax holiday to stimulate the economy?

[Saint_Cad]

@jasg

How about eliminating payroll tax, but for each year you and your employer do that - you agree that your Social Security benefits start one year later. Then do the same with Medicare taxes and eligibility -

Fine with me. Like SS will be around in 27 years when I retire.

[Grumman]

@mhendo

Actually, i’m similarly suspicious of the idea that even permanent tax cuts will lead to the boost in hiring that some advocates claim. Businesses don’t hire more people just because they have more revenue. They hire more people if they think it will create more revenue.

They hire more people if they think the cost of hiring those people is less than the increased revenue that will result. Pushing the marginal cost down works just as well as pushing marginal revenue up.

As an example: imagine that a potential employee can generate $60,000 in revenue for your company, but will cost you $50,000 in wages and $5,000 in overhead. If you have to pay a 12% payroll tax on his wages, you’ll be paying $50,000 + $6,000 + $5,000 = $61,000 to earn $60,000 in revenue. This obviously isn’t profitable. But if you don’t have to pay that 12% extra tax, you’re only paying $55,000 to make $60,000, meaning it is now profitable to hire him.

Now, this doesn’t mean a temporary tax holiday is necessarily a good idea, but the idea that reducing costs opens up new avenues of expansion is sound.

[gonzomax]

@Saint_Cad

Fine with me. Like SS will be around in 27 years when I retire.

Of course it will.
Unless the Repubs privatize it. Then it will diminish greatly by expensive management. It runs at 1.5 percent now. The bankers won’t keep that up. They could strain mega millions out of it.

[Chronos]

and the GOP doesn’t seem interested because… well, I don’t know why.

At least partly because that would mean they have to acknowledge the existence of payroll tax. How many Republicans have you heard bemoaning the “fact” that some absurdly high percentage of citizens don’t pay any tax? Obviously, they can’t moan about that if they admit that there are taxes that everyone pays.

[Broomstick]

@Blalron

What it does is “prime the pump.” Our country certainly has the capacity for everyone to be fully employed. But right now, demand is artificially low because people are reluctant to spend. Why are people reluctant to spend? Because other people are reluctant to spend.

I think you’re forgetting tens of millions of people who are reluctant to spend because they don’t have any money…

[Wesley_Clark]

Obama passed payroll tax cuts as part of the stimulus. But again the main problem seems to be lack of demand and lack of security. Even if you pass a payroll tax holiday that doesn’t mean anyone wants to buy what is being produced, or that if a company expands and adds 500 new workers that the economy won’t crash again in 2011 and cause the company to deeply regret the new expansion. We need security, stability and demand. And I don’t know when we will get them.