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Jun 9, 2011

Let's Just Abolish FICA And Be Done With It

From Bloomberg News:
President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages as they debate ways to spur hiring amid signs that the recovery is slowing, according to people familiar with the matter. 
The idea, which is in preliminary stages of discussion, is among several being talked about at the White House...
A hiring stimulus based on a tax break for employers may appeal to Republican lawmakers, many of whom have called for measures to help businesses....
A temporary break on employer payroll taxes would echo a centerpiece of the deal Obama and congressional Republicans reached in December 2010 to extend tax cuts enacted during the presidency of George W. Bush. That package included a two- percentage-point reduction in employee contributions to the payroll tax during 2011.
Update: Daniel Marans at FDL lays out the case against this sort of "temporary stimulus."

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    Anonymous Anonymous said...

    Even with a temporary tax break on FICA why would an employer hire unneeded workers unless the break was completely contingent upon adding workers? And then it would only be done if the cost of the workers was less than the tax break. Perhaps they would pass the tax break along in the form of higher wages and benefits. Along with the Easter Bunny and Santa Claus. This idea borders on the moronic. So look for quick and easy passage.

    5:01 PM, June 09, 2011  
    Anonymous Anonymous said...

    Can't wait until our hearing volume gets out of control again and the pendulum swings the other way.

    8:01 PM, June 09, 2011  
    Anonymous Anonymous said...

    Cut? I think we should just lift the stupid cap. There's a huge revenue stream right there.. why the cap? No I'm not a (D) either..

    10:10 PM, June 09, 2011  
    Anonymous Anonymous said...

    If the past is any precedent, once you give an explicitly temporary tax cut, when it expires and it is time to return to normal rates, you get charged with increasing taxes. Any politician should remember that before pursuing such a policy and what it means for Social Security in the long run. (Or maybe they are...)

    7:21 AM, June 10, 2011  
    Anonymous Mike B. said...

    I agree with the first commenter - business will hire only the workers they need. If their taxes drop, then they'll just pocket the money. After all, they're in business to make money, not employ workers. And if you want to give them a tax break, why tie it to Social Security? Social Security is in good shape, but extend the 2% cut in employee taxes and add an employer tax break and it won't be.

    11:38 AM, June 10, 2011  

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