A Payroll Tax Holiday

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Atrios on reports that the Obama administration is considering a temporary cut in payroll taxes to help stimulate the economy:

I think a full payroll tax holiday would be fine as long as it wasn’t yet another excuse to try to destroy Social Security, but an employer only one would be truly awful on substance, impact, and message. More help for the overlords, no help for you!

This is based on a Washington Post story that says Obama “is seriously weighing a package of business tax breaks — potentially worth hundreds of billions of dollars — to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses.” Last night, when I read this story, I too thought it implied that the White House was considering a reduction solely in the employer half of the payroll tax, not the half that you and I have deducted from our paycheck. That seemed insane. The current version of the story, however, is fuzzier and doesn’t give an impression one way or another about how the tax holiday would be structured. But it does emphasize over and over that this is a business tax cut, which is a very peculiar emphasis if the payroll tax holiday would apply to both employer and employee contributions.

Anyway, my guess is that this is just a combination of fuzziness from sources and fuzziness in writing. No president ever elected would be moronic enough to propose a cut in the business half of payroll taxes without an equal cut in the worker half. So I assume a full tax holiday for everyone is what Obama actually has in mind here.

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