Payroll tax holiday -- would this work?

[LSparkle]

I've been hearing a lot of pundits and so-called
economic "experts" saying that we need to get money
into the hands of people who will spend it -- and
quick. My first thought was a payroll tax holiday,
even just for a month, and limited to those making
less than X annually (fill in the blank; my thought
would be $100K). Considering the loss in revenue,
this would have to be offset by something (maybe
a temporary tax on those in higher brackets), but
this wouldn't require sending out checks and would
help put LOTS of extra money in people's pockets,
albeit for a limited time. If it were to work,
maybe make it a "twice annual" event -- give us
working slaves tax-free Decembers and Junes, for
instance.

Please feel free to educate me about how this wouldn't
work and some of the repercussions that would need to
be considered, but I just thought this might be a
fairly easy fix to get some more money into the system
(NOT TO THE BANKS!).

[DJ13]

1. No

The largest payroll tax most workers pay is Social Security.

This scheme promoted by Republicans seems to be targeted to underfunding Social Security so it collapses sooner.

[LSparkle]

4. Could this be offset by raising the cap on those paying into SS?

It absolutely rankles me that those who make over $93K
(or whatever the max is) no longer have to pay that ...

Another thing I was thinking about was a "donut hole" --
maybe saying that those who make up to $30K annually
pay into SS, and then for the next $100K or so they
earn, they don't pay, and then over $130K the SS payments
kick back in ... If employer payments were also suspended
during the donut hole, we might see more companies happy
to keep salaries at less than $130K (less SS to pay)
and more hesitant to commit to bigger pay packages
(knowing that after $130K, they'd be on the line for
SS payments again).

Just a thought ...

[sandnsea]

2. You mean tax cuts?

Sorry, had to say that, hehe.

I think it's not targeted enough which is the problem with Republican economic policy to begin with. It would be better to raise taxes and put the money in infrastructure, as long as you didn't raise it on the bottom 60% or so. We need money to go into specific items, which is what Clinton did in the 90s. He was lucky in that there was an internet boom, but he (Gore really) also helped that boom along by putting money into federal projects, states, cities and schools. That's what we need now, and not the phony mortgage market Bush created either.

[LSparkle]

7. As long as infrastructure includes jobs for WOMEN ...

I know we need bridges and levies rebuilt, and roads,
etc. but hopefully infrastructure also includes building
of things/systems that WOMEN can do. I hate to be
sexist about this, but when I think infrastructure
construction, I see men alongside freeways, not women
at computer terminals or in jobs that require other
than manual labor.

[Uben]

3. How about retirees?

We are the ones who have just lost half our life savings! I think the best way to stimulate the economy is to send retirees a check for a million dollars each. We'll be dying soon, so the money will trickle down.

[FogerRox]

5. No. Those Pundits seems twisted.....

We need jobs, we need upward wage pressure. These things will give the markets confidence, the tax holiday will not be well regarded by the markets, in fact the markets will likely LAFF at the idea, and then said markets will go down even more in response to a really stupid idea.

[LSparkle]

6. Yeah, and I guess we still have to bow at the altar of the ...

almighty markets ...

:sarcasm:

I guess I'm just getting tired of being played
by Wall Street ...

[northernlights]

8. just more of the same...

People will use the extra money to pay down credit card or mortgage debt, or save for the next hurricane.

The amount of cash it would require to get people spending again is probably astronomical, when you look at the mountain of credit card debt that is owed.

It also, sadly, leaves out the unemployed who desperately need the money just to survive. The true unemployment rate, when you count people like me who have long since fallen off the unemployment rolls, is at least 12.5% and rising.

Per Krugman, job losses will continue at it's current rate (latest # was over 600K/month). By summer, people collecting will be 9%, real unemployment probably pushing 20.

[sandnsea]

9. Unemployment is measured by survey

It is not just the number of people collecting unemployment. The problem, I think, is that the Bushies changed the definition of employed so that they now count a mom who is babysitting as employed, or a guy doing odd jobs, even if they're only doing it because they can't find a job.

[Citizen Number 9]

10. If you are talking about temporarily shorting Social Security

I don't think that will be too popular with the folks who are already concerned about the viability of the SS system.

In any case, people who are already working and earning aren't the ones who need the most help. It's the ones who have recently lost a job.

JOBS. That's where we need to put the money