It’s a little unclear why The White House hasn’t put forth an elimination (temporarily) of the payroll tax, a move that would instantly make labour cheaper, and thus make the decision to hire new employees more compelling.
One possible reason for this is that doing so would make the situation at the Social Security Trust Fund even worse, and since Social Security is such a hot-button issue, this would be problematic.
But if that’s the reason, it truly represents a failure of sound thinking.
The Social Security Trust Fund is just an accounting fiction. It doesn’t actually represent some unique fund that needs its own funding. It’s part of the total government, and payroll taxes are part of the government’s revenues. So a cut to the payroll tax is no different than a cut to any other tax that results in less revenue for the government.
Anyway, let’s hope this isn’t the reason The White House isn’t pushing this payroll tax holiday, and that they actually have an idea that makes sense.
Now see: 14 scary facts about the deficit >
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