Proposed payroll tax cut could help economy
With the debt limit bill signed, President Obama is moving on to other pressing issues such as the possibility of extending payroll tax cuts for another year - an initiative he advocates.
Cuts reducing the amount of Social Security payroll tax paid by employees put more money in workers' pockets.
According to a simulation run in accordance with the macro-econometric model of Yale University Professor Ray Fair, University of Delaware economics professor Laurence Seidman recently predicted that an immediate suspension of the entire payroll tax lasting until December 31, 2012, would result in the reduction of the unemployment rate by a full percentage point in the fourth quarter of next year, the Delaware News Journal reports.
Kick-starting the sluggish job market can be realized by a stimulation of private sector spending, which is the aim of allowing employees to keep a larger percentage of their paychecks.
According to Seidman, taxpayers are likely to spend approximately half of a $1,000 temporary tax cut, and put the remainder into their savings or use it to pay off debt.
Peter Orszag, the former director of the Office of Management and Budget, supported this idea in a recent Bloomberg article. Specifically, he offered the opinion that extending the existing payroll tax holiday is likely to minimize harm to the labor market.
Cuts reducing the amount of Social Security payroll tax paid by employees put more money in workers' pockets.
According to a simulation run in accordance with the macro-econometric model of Yale University Professor Ray Fair, University of Delaware economics professor Laurence Seidman recently predicted that an immediate suspension of the entire payroll tax lasting until December 31, 2012, would result in the reduction of the unemployment rate by a full percentage point in the fourth quarter of next year, the Delaware News Journal reports.
Kick-starting the sluggish job market can be realized by a stimulation of private sector spending, which is the aim of allowing employees to keep a larger percentage of their paychecks.
According to Seidman, taxpayers are likely to spend approximately half of a $1,000 temporary tax cut, and put the remainder into their savings or use it to pay off debt.
Peter Orszag, the former director of the Office of Management and Budget, supported this idea in a recent Bloomberg article. Specifically, he offered the opinion that extending the existing payroll tax holiday is likely to minimize harm to the labor market.
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