Posted by: Rational Voice | September 14, 2011

Payroll Tax Cut

I’ve brought up the point in the past that cutting payroll taxes is not enough to spur job creation or get the economy going again.  And while I typically support anything that allows people to keep more of their money, I simply cannot support this tax cut for two reasons:

  1. It’s temporary but yet the president thinks businesses will start hiring because of it. They won’t though because businesses don’t look a few months into the future, they look years into the future. They aren’t going to hire one worker now because they’ll get a temporary tax cut. I will say this though, at least this time they are cutting the payroll tax for on the employer side as well as the employee side (each side pays a share of it…well actually in reality, the employee does in decreased wages because of the fact their employer has to pay this) because last time it was just for the employee, not the person who actual creates the jobs.
  2. While the first point is important, it is not nearly as important as this point: the payroll tax is what pays for Social Security, a program which is essentially bankrupt as it is, so how is cutting the very taxes which fund this program going to help keep it afloat? The answer is simple: it won’t. It will only speed up the ultimate demise of them. I am fine with this program ultimately dying but unfortunately it is not something we can have happen quickly.  Millions have paid into this their entire lives and do deserve to get something from it. And I’m willing to keep paying something into it even if I don’t get anything out of it just so we can kill it, but if it goes belly-up soon because we refuse to reform it, we will have a massive mess to deal with.
Overall, this whole payroll tax cut is nothing but game. It allows President Obama to say he cut taxes (a tax cut that won’t do anything, which he knows) so when the economy still doesn’t recover, he can say he compromised and tried Republican ideas and that they don’t work. Secondly, I think this will allow Democrats to, in the future, pin the blame on Republicans when Social Security finally tanks because it was their tax cuts which left it without adequate funding (never mind the fact that they, along with a number of Republicans, refuse to make changes to deal with our demographic shift). The payroll tax cut is not sound economics or policy; it is simply political posturing and nothing more.


  1. Fifty-six percent like the idea of a payroll tax cut and 52 percent think providing money to state governments so they can avoid layoffs of public employees is a good idea. Large majorities of Democrats Republicans and independents alike think cutting taxes for small business is a good idea and most also think a payroll tax cut is a good idea.

  2. Very efficiently written information. It will be beneficial to everyone who utilizes it, including yours truly :). Keep up the good work – for sure i will check out more posts.

  3. […] is hardly surprising and I even wrote about how the president’s payroll tax cuts would make the problem worse.  Since Social Security and Medicare funding is being squeezed by not […]

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