Trump’s Payroll Tax Cut Would Dwarf the 2008 Bank Bailout – The New York Times

Thanks! Share it with your friends!

Close

The full payroll tax suspension “would not only increase workers’ take-home pay but would ease cash flow constraints for employers who are likely to face a rough patch in the incoming months,” said Karl Smith, the vice president of federal tax and economic policy at the Tax Foundation, which traditionally supports cutting taxes to spur economic growth. Mr. Smith said he supported the Trump proposal, though the Tax Foundation had not taken an official position.

“The payroll tax would be great,” Mr. Trump said on Wednesday. “Dems are not in favor of it. I’m trying to figure out why.”

Democrats are opposed for several reasons. Many economists, including liberals and conservatives who have called for stimulus measures, say there are much more effective ways to stoke demand and support growth during a viral outbreak. They note that cutting payroll taxes only helps Americans who are still working — and not those who are furloughed by quarantines or laid off amid floundering sales. The benefits would arrive gradually across paychecks instead of in one stimulative burst.

“A payroll tax cut like the president wants wouldn’t help the elderly, non-employed, who are at the most risk from the virus,” Michael R. Strain, an economist at the conservative American Enterprise Institute, wrote Wednesday on Twitter. “It would provide a larger benefit to the well off. And it isn’t targeted on those who need it.”

Claudia Sahm, an economist at the liberal Washington Center for Equitable Growth, said Thursday that lawmakers could still ward off a recession with stimulus, but “a payroll tax won’t do it.” She and Mr. Strain both favor giving cash assistance to Americans.

Cutting payroll taxes “will be too slow, and its effects too small,” Ms. Sahm said. “So small most won’t even notice it. Those who don’t have or will lose their jobs won’t get it at all.”

The political calculations around payroll tax cuts are fraught. The tax feeds the Social Security Trust Fund; while administration officials said they would most likely divert other money to avoid robbing the fund, cutting payroll taxes would further balloon the rising budget deficit.

Source Article from https://www.nytimes.com/2020/03/12/business/trump-tax-cut-coronavirus.html

Comments

Write a comment