Don't Extend The Ill-Conceived, Evil Payroll Tax Cut

Forbes ^ | 12/22/2011 | Louis Woodhill

[SeekAndFind]

On December 20, the House of Representatives refused to pass the Senate’s 2-month Social Security payroll tax cut extension. This created the genuine possibility that this temporary 2.0 percentage point cut in the 6.2% Social Security tax normally paid by employees would expire at the end of this year.

It became clear before the financial markets opened in New York on December 20 that the tax cut extension would be defeated. The Dow Jones Industrial Average (DJI) opened sharply higher and ended the day up 2.9%. The action in the European markets suggested that it was the news of the tax cut defeat, not the earlier news of larger-than-expected ECB loans to European banks, that caused the surge in equity prices in both the U.S. and Europe.

Why would the markets soar in response to the defeat of a tax cut extension? Because this one of the very few tax cuts that is actually bad for economic growth.

SNIP

Supply-siders believe that permanent cuts in marginal tax rates (particularly on savings and investment) will increase economic growth. The payroll tax cut that was defeated by the House yesterday was none of these things.

The Social Security tax is a tax on labor income. Because it is “capped” (it applies to only the first $106,800 of wages for 2011), it is not a tax cut on the margin for the people who make the decisions that determine economic growth. And, the tax cut passed by the Senate was to last for only two months.

So, what we have here is a tax cut that does (at best) nothing for economic growth, does (at best) nothing for employment, but adds more than $100 billion per year to the deficit and debt.

[texican01]

I agree. The Conservative wing of the GOP has stood in the gap against the jackass establishment, communist/anarchists and Obummetrites

[antidisestablishment]

They are not against the “tax cut.” No one, R or D, has come out against it that I have heard. The Republicans simply want to use it to force the Keystone Pipeline debate.

Poor choice either way, they haven’t got the intestinal fortitude to attack, so they end up looking like the impotent, petulant fools that they are...

[Graewoulf]

Question to all Freepers: Why isn’t Minority Leader Senator Son-of-a-Mitch McConnell being flamed on FR for his stupid payroll deal with “Bottleneck” Reid?

[Sgt_Schultze]

Republicans are missing the democrat plan in this payroll tax mess. Libdems intend to offset the 2% cut on employees with a 2% surtax on employers. The intent is to eventually shift the entire "contribution" away from the employee and onto the employer. That is how the libdems intend to enlist the rest of working Americans in their fight against business. Once they successfully remove the employee as a "contributor," libdems expect there will be little future resistance to increasing the withholding rate in order to "stabilize" the Social Security system.

In the end, it's just about creating more advocates for higher taxes.

[Hojczyk]

Best Part of article..

America has a two-party system. We have a Stupid Party (the Republicans) and an Evil Party (the Democrats). Every so often Congress does something that is both stupid and evil, and we call this “bipartisanship”.

The Social Security tax cut is both stupid and evil. Stupid, because it increases the deficit, while actually retarding economic growth and job creation. Evil, because it turns Social Security into even more of a welfare program than it already is, while pretending that this is not what is happening.

[Sgt_Schultze]

That’s a notion I first saw put forward by the late Samuel Francis. It is still true - very true.

[The Theophilus]

Question to all Freepers: Why isn’t Minority Leader Senator Son-of-a-Mitch McConnell being flamed on FR for his stupid payroll deal with “Bottleneck” Reid?

Because people of character don't pick on or ridicule the mentally retarded.

[Graewoulf]

I guess that makes me not a person of character.