A Payroll Tax Holiday

I pitched this idea earlier, and then asked Flip to run the actual numbers.

For the cost of Obama's $1.2 trillion "stimulus," we could give employers a 2 1/2 year payroll tax holiday. Encouraging them to hire new workers by reducing their actual costs.

Over 2 1/2 years, that's 2.8 million new jobs, based on standard economic assumptions. Nevermind the additional jobs "preserved" (in Obama's weak promise) due to the fact it would now be cheaper to keep staff in place.

If this is all about jobs, jobs, jobs, and we want a sharp sudden impact for our dollars, why not consider this route?

Alternately... To mollify the public (Hey, why are my employers getting a tax cut and I'm not?!!), one could give employers and employees both a half reduction for 2 1/2 years. Or both a full, complete holiday for 1.25 years.

Posted by: Ace at 05:45 PM

Comments

(Jump to bottom of comments)

1 Can't have that because it will prove supply-side policies actually work.

Posted by: aquaviva at January 30, 2009 05:48 PM (pSTP6)

2 Except for the fact we don't even have the 1.2 trillion, it's great. The social security boondoggle has been the only thing keeping the federal budget from being even more of a laughingstock than it already is.
That's the point, I think. 700 billion here, 800 billion there..pretty soon you are most assuredly NOT talking about real money.

Posted by: A Balrog of Morgoth at January 30, 2009 05:49 PM (wgLRl)

3 I am going to plant or save 4 million trees this year.

Posted by: Shy Yll at January 30, 2009 05:49 PM (301dE)

4 That's just crazy talk.

BTW- As someone who is self-employed and pays both halves of the tax...this would be a major savings. I'd go buy a fucking car or something. Seriously.

Posted by: DrewM. at January 30, 2009 05:51 PM (hlYel)

5 >>>Except for the fact we don't even have the 1.2 trillion, it's great.

Well we also don't have it for Obama's bike paths and condoms and bee insurance.

Posted by: ace at January 30, 2009 05:51 PM (gEsIJ)

6 Dont mean to be the spelling nazi ace, I love ya but its "hire" new workers.

Posted by: Iwillnotsubmit at January 30, 2009 05:51 PM (JqIhC)

7 Well, uh-h-h-h, you see the problem with that idea is you get to spend the money on what's important to you, and not on what's important to me.

Posted by: Barak "Tits" Obama at January 30, 2009 05:51 PM (oEAm5)

8 Not to say that I am against tax cuts. I most assuredly am not. It's just that without locking in some discipline(LOL..TARP...Stimulus...and we haven't even got to the yearly budgets yet) on the spending side, all we do is make the deficit even more of a looming mountain, despite the eventual increase in revenues.

Posted by: A Balrog of Morgoth at January 30, 2009 05:52 PM (wgLRl)

9 5 >>>Except for the fact we don't even have the 1.2 trillion, it's great. Well we also don't have it for Obama's bike paths and condoms and bee insurance.
Posted by: ace at January 30, 2009 05:51 PM (gEsIJ)
We don't have it for anything, but that's OK, my two year old's future grandkids can pay it off.

Posted by: A Balrog of Morgoth at January 30, 2009 05:54 PM (wgLRl)

10 If this is all about jobs, jobs, jobs, and we want a sharp sudden impact for our dollars, why not consider this route?

When you can snatch the pebble from my hand, then you will have the answer to your question.

Posted by: Empire of Jeff at January 30, 2009 05:55 PM (bu0Ek)

11 >If this is all about jobs, jobs, jobs, and we want a sharp sudden impact for our dollars, why not consider this route?

Because I won, motherfucker.

Posted by: Barack Hussein Obama at January 30, 2009 05:55 PM (VkNlv)

12 As somebody who runs a small business, 7 souls including me, this is simply a wonderful idea that would actually work. It would enable me to hire the additional people we need more quickly.

Naturally because it would help evil rich companies this would never even be considered.

Posted by: crashland at January 30, 2009 05:55 PM (4ox4M)

13 U-h-h-h-h-h, also, I wouldn't be able to dump billions into ACORN so they can steal the next election for me, uh-h-h, six or seven years from now.

Posted by: Barak "Tits" Obama at January 30, 2009 05:55 PM (oEAm5)

14 ace why are you trying to imply that this stimulus is not about jobs??? because it is and well of course the children too....oh and the environment, for the children to enjoy of course.

Posted by: unamerican libertarian formerly known as e.koenig at January 30, 2009 05:56 PM (2J+Vs)

15 Or we could just end withholding and promptly watch the American public stage a tax revolt once it realizes how much of its money the government is really taking. Of course, that would put us back on the path to sustainable, responsible fiscal policy, which is precisely why it won't happen anytime soon.

Posted by: Slowking Man at January 30, 2009 05:58 PM (lz0gP)

16 I think, just as I did during the Bailout debacle, that the real solution here is to not fucking panic. Throwing numbers like 700 billion, 800 billion, 1200 billion...that is a panic.
I do not know enough to know that I do not know enough, but my gut tells me that this is as much a pyschological panic as it is an economic one, and that all these half-assed slapped together rescues will just make the long term outlook more bleak.
Again, I don't know anything, except that I have a sneaking suspicion that I have an inkling of what a steer in the chute is thinking before he meets the strapping lad with the sledgehammer.

Posted by: A Balrog of Morgoth at January 30, 2009 06:01 PM (wgLRl)

17 Listen, all this talk about the stimulus package is just a distraction. We should talk about the real issues....like....

U-h-h-h-h, do you guys think I should use udder cream on my moobs to make them all nice and supple?

Posted by: Barak "Tits" Obama at January 30, 2009 06:02 PM (oEAm5)

18 I'd prefer this idea to the alternative, but won't the beneficial effect of the holiday end when the holiday ends? Let's say company x wants to hire more workers, but the payroll tax makes it unaffordable. The holiday makes it affordable. But then the holiday ends, and now the company has tax obligations that it didn't have for the previous 2 1/2 years. Won't the company have to let go those workers it hired?

Posted by: angler at January 30, 2009 06:03 PM (kSuu1)

19 Of you could spend about the same amount Obama is spending and <a href="http://realstimulus.blogspot.com">end the recession OVER FUCKING NIGHT</a> and ensure that the the US remains the leader of the economic world for the next century.

Posted by: DaveS at January 30, 2009 06:04 PM (sYBRB)

20 Um... sorry for the moron link... here's the link again.

Posted by: DaveS at January 30, 2009 06:06 PM (sYBRB)

21 Good idea.

Except, I think, no one knows and is willing to bet on what the government is going to do to screw things up further. It's pointless to look backwards and place blame, and Obama promised hearts, flowers and unicorn magic in his campaign for President, so what we need to evaluate is what happening now, which is a complete gonzo outbreak of cynically-designed insanity designed to spook the rubes into demanding the Democrat's offer.

Who wants to invest in business when everyone with more power than you is insane and can/has virtually promised to take most of it away from you?

Posted by: Greg Toombs at January 30, 2009 06:09 PM (URFAu)

22 Ace,

Remember that the social security "surplus" funds other programs that the government has committed itself. Now if you're plan was put into action, it would mean that many discretionary spending programs (including defense) would be unfunded or underfunded. We can certainly debate if this is a good thing or a bad thing, but I don't understand how we get away with calling it a tax cut, since the government is not, in any way shape or form, going to cut social security or any other spending, so the budget shortfalls will have to be compensated for in other areas, possibly income or excise taxes or, even more likely, inflation.

My opinion is that these stimulus' don't work, and even if they did, the government debt is too large to risk the loss of tax receipts that a tax cut could induce or the increases in spending which will only accrue more debt even after the projects are completed.

Posted by: Tim B. at January 30, 2009 06:10 PM (PuIP7)

23 Dim's don't care that this plan will be better and cheaper. You ain't locking no public lips to the government teat, so they're not interested. Once ya got 'em suckling, their hearts, minds and wallets will follow.

Posted by: GarandFan at January 30, 2009 06:15 PM (237hA)

24 1.2x1012 dollars. $1,200,000,000,000.
I bet we could fucking buy France for less than that.

Posted by: Lemmiwinks at January 30, 2009 06:19 PM (Nwbo8)

25 Looks like cash-based businesses are gonna be the only way to survive the next decade. Like recreational pharmaceutical sales.

Posted by: IllTemperedCur at January 30, 2009 06:21 PM (kJisp)

26 I am 100% behind this, but with a slight spin...

Employers can deduct and corresponding percentage for each percentage increase in payroll for 2009. Throw in a "stimulus" cash kicker for employers who hire the currently unemployed or expand payrolls over a certain percentage or some other good reasons... just for a quicky cash injection

Here's the beauty:
1. You minimize Fed investment to the kickers... shouldn't cost much; not nearly a trillion.
2. The loss to the Fed would be mostly realized on 2009 tax returns. We can fairly easily project that loss in tax revenue and prepare for it for a year with corresponding spending cuts over the next 12 months.
3. Lots of people go to work. Working people pay income tax and buy stuff. Putting a few million people to work will have a hell of a lot more "stimulating" effect on consumer spending and confidence than sending out checks to long term unemployed minorities. Those checks should go toward debt (like mostly happened in 200

and result in zero stimulus impact, but given the new target group and the Hopenchange policy of not actually paying bills... the only impact would be to Rent-A-Centers for flatscreens that will then default in 3 months. People with new jobs buy new work clothes immediately, catch up on bills, keep buying stuff long term and have a lower default rate that the currently targeted recepients.
4. 2009 personal income tax returns will offset the loss to the business tax credits, thus evening things out somewhat and we don't incur and extra 1.2 trillion in debt. Plus, states benefit from sales tax revenue and state income tax (for all you sorry bastards that don't live in TX or another state that thinks that income tax is for communists and community organizers).

Support the Damiano Plan. Write your CongressCritter and demand Damiano for Sec Tres. once we can get Geithner locked up.

Posted by: Damiano at January 30, 2009 06:22 PM (cfKer)

27 24
1.2x1012 dollars. $1,200,000,000,000.
I bet we could fucking buy France for less than that.
Posted by: Lemmiwinks at January 30, 2009 06:19 PM (Nwbo

Get your bids in now. That amount in 2010 dollars might get you a baguette.

Posted by: A Balrog of Morgoth at January 30, 2009 06:27 PM (wgLRl)

28 1.2x1012 dollars. $1,200,000,000,000.

I bet we could fucking buy France for less than that.

Posted by: Lemmiwinks at January 30, 2009 06:19 PM (Nwbo

Why buy them when they would surrender if we chucked a water ballon at them?I've got dibs on their First Lady once "Speedy" Sarkozy runs away to Switzerland.

Posted by: Damiano at January 30, 2009 06:28 PM (cfKer)

29 If the Dems did something that made this much sense, the market would gain 5000 points in a day. The unemployment rolls would be wiped clean (except for frictional unemployment.) Many folks who are up against the wall right now because of the economic mess the Democrats created would have a decent shot at becoming self-sufficient again and getting off the government tit.

That's the reason the Dems will never do it. They can flap their gums all they want about "creating jobs," but the party requires for its longterm survival a permanent underclass on the dole. The more dependent they can make Americans on government (i.e., taxpayer) largess, the greater their power.

They don't care about stimulus; they care about power. That is why they will never go for any type of meaningful tax cut.

Posted by: Pavel at January 30, 2009 07:22 PM (UFpcQ)

30 Why not consider a tax holiday instead of spending as "stimulus"?

Obviously, a tax holiday does nothing to increase government power. There is no pork for politicians to buy votes with. There is no social engineering involved. No citizen will be strong armed to do something.

What would possibly appeal to a Big Government politician about that?

Posted by: CoolCzech at January 30, 2009 07:38 PM (iafWn)

31 Just use Turbo Tax (or lie about the numbers) to figure out all taxes - payroll, income, real estate. That should be great fun and a great way to punk the government.

Posted by: landofcapone at January 30, 2009 07:44 PM (iAlY4)

32 Drop the Federal Corporate income tax to 0%. Businesses hire, new employees pay taxes, stocks rise, 401k's recover, people calm down; Its Morning in America.

Posted by: toby928 at January 30, 2009 08:15 PM (PD1tk)

33 I'm with the Balrog. "The real solution here is to not fucking panic."

I think we should send President Obama a copy of The Pet Goat. He--and congress--needs to take some time out to read.

Posted by: Jerry at January 30, 2009 08:23 PM (7Ahkq)

34 Heck, if they'd just drop taxes for February, when I get my bonus, I'd do a jig in public.
Lump sum payments get zapped like a mutha.

Posted by: jmflynny at January 30, 2009 08:46 PM (j3Q+l)

35 "The real solution here is to not fucking panic."

Good luck. I've been trying to tell people that for years.

Posted by: The Hitchhiker's Guide to the Galaxy at January 30, 2009 08:50 PM (hlYel)

36 1.2x1012 Zimbabwean dollars. ZW$1,200,000,000,000.

I bet we could almost fucking buy France a mouldy baguette for less than that.

Fixed

Posted by: cheshirecat at January 30, 2009 10:45 PM (wob2B)

37 Y'all gotta green, gotta get Organic. See how the system grows, get back top that and the organic nature of guvment will save us all

That cash paid taxes is for those who can pay taxes in cash.

Same as yesterday, most folks cannot pay their taxes in cash, because they they have no cash - just because some poor folk have no cash for food does not mean they should not get food for 'free' - I see ambitious folks all the time, sitting side the road, with sign in hand, "will work for food".

These folks now who get food stamps, and whatever, they do not need Bill Gates, or his money to eat. If they are hungry they will be happy to work for a bowl of rice a day.

Now, Obama, he is a great man, he would rather kill the rich to feed the poor.
Hardly cost effective, but that is not what most great men strive for.

Obama were to have his way he may well become one of the greatest men in history.

Posted by: Druid at January 31, 2009 12:19 AM (mdr+B)

38 Tax cuts, tax breaks, bailouts...all b.s.

1.2 trillion by Obama and 750 billion+ by Bush makes 2 trillion...If they have enough ink to print up all that money, the best solution to kickstart the economy and make everyone feel great to actually be an American, would be to simply divide the money up amongst the citizens, and then watch the trickle-up effect as people pay off their credit cards, their mortgages, and even have some spare pocket change to buy their kid the G.I.Joe with the kung-fu grip.

The plan is completely insane, but then so are all the others I've seen...

Posted by: Thorne at January 31, 2009 12:52 PM (y+N1j)

39 Lets declare a Jubilee year. Erase old debt, free our slaves and start fresh. The Jews knew what they were doing.

Posted by: toby928 at January 31, 2009 02:58 PM (PD1tk)

40 Three months. No SS, no Fed IncTax. Just 3 months. Stop the recession dead in its tracks. It will not cure all that ails us - government should not be doing it anyway.

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