Make Work Pay died quietly, but the payroll tax cut will not.

[jpgray]

Note the differences between the two - the payroll tax cut benefits you more and more insofar as you have more and more income (up to the cap). Under Make Work Pay, families making up to $40,000 received a greater benefit than they receive now or will receive in the future under the payroll tax cut. Make Work Pay is also wiser in the sense that it does not include a massive tax cut to all businesses on the first $5 million of payroll.

The claim is that both the employee and employer side of the payroll tax cut target working families and small business, respectively. Yet what is left out of the rhetoric is that the cut applies to all, no matter how wealthy.

The $5M cap on the employer side will give a huge break to companies like GE who pay no taxes, and companies like Apple who are already sitting on billions. It will give a smaller break to actual small business - remember nearly five million out of six million employing firms employ 9 employees or fewer. Absent an average salary in the hundreds of thousands of dollars, most small businesses don't even come close to the cap. Then there is the natural fact that absent demand and good investment opportunities, companies will not hire people to do nothing or invest in capacity for it to sit idle.

This is true of the employee side as well. A worker making $200k or more will benefit far more from the employee side of things than a worker making $35k, yet that person does not need a tax break. That person certainly doesn't need to receive a greater break in dollars than a worker near the poverty line. Under MWP, at least there wasn't the awkward truth that the rich person received greater savings in dollars than the poor person.

The argument for extending any tax cut is old as dirt. It goes something like this:

Now is not the time to put the economy and the security of the middle class at risk. Now is the time to rebuild an economy where hard work and responsibility pay off, and everybody has a chance to succeed. Now is the time to put country before party and work together on behalf of the American people. And I will continue to urge Congress to stop playing politics with the security of millions of American families and small business owners and get this done.

The problem is that life is always hard for actual small businesses and working class families. If the above argument always holds, then we do not have a temporary but a functionally permanent tax cut. In addition, this tax cut provides greater relief to the rich than the poor, and greater savings to the bigger firms than to the smaller businesses.

[stellanoir]

1. I missed that they axed MWP.

that's a bummer for me in my paltry bracket.

Oh well.

on it goes

[subterranean]

2. MWP was replaced by the payroll tax cut.

Obama wanted to extend Making Work Pay for another year, but Republicans blocked it because it didn't benefit the top 1%.

[stellanoir]

3. So the self employed are screwed.

Didn't see your response till this morning but thanks for the explanation.

[TheKentuckian]

5. Doesn't that make you wonder why the payroll cut can "slide by"?

Do you know who's concept it is and what it is designed to do?

[GirlinContempt]

4. Hi!!!!!!!!!!!