Ortiz: White House Payroll Tax Cut Would Counteract Coronavirus Downturn

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Alfredo Ortiz of Job Creators Network writes in The Hill in favor of Trump’s proposal to combat the financial downturn created by the coronavirus with a payroll tax cut that would put money back in workers’ pockets, creating more demand for goods and services.

President Trump has laid out a major part of his national response to the financial downturn induced by the coronavirus with a substantial, perhaps even total, payroll tax cut. This would put thousands of dollars back in the pockets of ordinary workers. Such a tax cut would not only help countless Americans but would also create more demand for goods and services, counteracting the economic, if not epidemiological, contagion.

To do even more good, the payroll tax cut should be extended to small businesses, the economic engine of the country that is disproportionately impacted by the coronavirus. Democrats, who like to claim they support small businesses, should put aside their partisan differences and approve such a payroll tax cut to address the pending national emergency.

The payroll tax is the biggest fiscal burden facing most Americans across the country. Nearly 70 percent of taxpayers pay more in payroll taxes than in federal income taxes. At more than 7.6 percent of every paycheck, this tax is almost twice as large as the amount that ordinary employees pay in income taxes. It has nearly quadrupled in size since 1955. By cutting the payroll tax, take home incomes rise along with consumption. According to Mark Zandi, chief economist at Moodys Analytics, gross domestic product increases by 80 cents for each dollar cut in payroll taxes. This is among the fastest and most direct methods to address the downturn.

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