Payroll Tax Cut: Yea or Nay?
December 31st is D-Day for the Payroll Tax Cut extension originally implemented to give the average American worker some relief on their wages. In a politically charged environment with a Presidential election year looming, everyone is up in arms about whether or not this extension should continue. Republicans seem to have mixed perspectives on how to approach this, while Democrats for the most part are behind continuing the extension. Well, here’s my fifty cents:
One: They should vote in favor of the extension through next year. However, simply cutting payroll taxes without a way to supplement that lost Social Security and Medicare income is obviously not sustainable. These kind of tactics are indicative of the overall sense of fiscal irresponsibility on the part of the US Government. More tax cuts without new sources of revenue will always lead to a deficit: that’s basic economics. Continue the extension, but find a way to pay for it that doesn’t have long-term ramifications.
Two: We went through this foolishness last year, and if you recall, it ended up making the IRS late in getting their information out to the public. It made employers have to scramble to get the information right for their first paychecks of the year. Why does the government wait until the 25th hour to get things done? One could make the argument that this is why the government doesn’t work. They are reactionary, not proactive.
Three: Until a consensus is reached on how to control spending on the whole, how to generate new revenue (i.e., reducing tax breaks for the rich) and the unemployment numbers go down, measures like the payroll tax cut are going to be de facto.
My strongest suggestion to our government is to fix the tax code. They wonder why we don’t have the kind of revenues we used to – take a look at the pervasive tax cuts that have gone on for the last 20 years. They have undermined the ability of this country to thrive and as a result, driven up prices for production, thereby sending those jobs overseas… jobs we probably won’t ever see again. Help small and medium-sized businesses thrive, make the taxing solutions more equitable across the board and stop pussyfooting around the critical issues.
Everyone in the White House and Congress are heavily concerned with their political careers and seemingly no one is willing to be the leader and take the hits when it comes down to the obvious things that need to be done. Yes, the payroll tax cut IS a band-aid, but it is a necessary band-aid in a difficult economic environment. Until real, long-term solutions are put into place, it is one that we are going to be forced to wear.