Marc Goldwein: A better way to cut the payroll tax rate
Marc Goldwein is senior vice president and senior policy director of the Committee for a Responsible Federal Budget. He recently wrote an opinion piece for The Hill, an excerpt of which is below.
With a possible recession looming, the Trump administration is reportedly considering a temporary payroll tax holiday to boost the economy. A temporary cut to the payroll tax rate – which should only be considered if the economy deteriorates significantly – may help combat the next recession by reducing layoffs and giving workers more money to spend, as it did in 2011 and 2012.
But a better plan would be to enact a permanent cut in the payroll tax rate and to apply the employer side of the payroll tax to a broader base that includes all compensation, not just covered wages. Replacing the employer payroll tax with a compensation tax could boost both short- and long-term economic growth, making the payroll tax more efficient and progressive and helping to shore up the Social Security trust funds.
Read the entire piece here.
"My Views" are works published by members or staff of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members or staff of the Committee.