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Thread: Obama Team Eyes Employer Payroll Tax Break

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by MaggieD View Post
    So. Let's see. "Lowering taxes doesn't stimulate the economy unless we say it does." Lower regular tax rates! Not payroll taxes that are already propping up a failed program...
    I think I understand where you're trying to go here, but I think you have things mixed up abit.

    I'm not a businessman nor am I an accountant. So, someone who is I'd appreciate some clarification here.

    If you lower the regular tax rate (on individual wage earners), you reduce what people pay in taxes each year. But if you lower the payroll tax (for businesses), you reduce the quarterly payroll tax businesses pay on wages they pay to their employees. But wouldn't that also reduce the amount of taxes deducted from employee's paychecks thereby freeing up capital all around for everyone thereby putting more money in people's pockets thereby giving consumers more money to spend on commerce?

    If true, why wouldn't you want that to happen since the law of supply and demand (something taught in high school economics classes) is based on consumer spending? And if consumers are demanding more of a product, does it not stand to reason that manufacturers would make more of said product that's in high demand? Seems to me reducing the payroll tax would be a win-win all around for everyone - businesses, employees, our nation's creditors (since consumers would pay taxes on the goods and services they buy; the down side, of course, could mean many of us likely pay more taxes at the end of the year), politicians (because some hate tax increases)?
    Last edited by Objective Voice; 06-09-11 at 11:58 AM.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by Kandahar View Post
    Only in the specific example of a long-term purchase like a cell phone plan. People can and will buy one-time purchases like new televisions.
    However, those would be a one time purchase, not a long term uptick or trend of additional purchases. Meaning manufacturers will have a period of higher manufacturing, but not one that justifies hiring of more people because in short order the demand will be reduced as the one time sum of money is gone and it returns back to normal.

    One of those high costs is the payroll tax that businesses contribute, so reducing it WILL spur hiring. I don't see what the Affordable Care Act has to do with anything, since the cost to employers is a benefit to the employees (unlike payroll taxes). In any case, it isn't going anywhere so that's a moot point.
    Not when the reduction is for a limited short amount of time, because after that reduction goes away they're still saddled with the employee, but now at the higher rate again that they previously couldn't afford to hire someone new on.

    As for bringing them on long term...there are a lot of businesses that don't operate on that business model anyway. If the cost of employing someone right here and now is reasonably low, there are plenty of businesses that will do so. Not every business plans for you to be there for the next 30 years; indeed, there is a lot more long-term uncertainty in the business environment than just the payroll tax. There always is.
    And most any job can afford to hire someone for 1 day, so no need for the tax cut. Looking at extremes can make most arguments seem silly. "Long Term" could be even just 3 to 5 years. In a job that requires even a decent bit of training, if it takes 3 or 4 months to get someone up to speed working at the level you'd expect for your employees then you're hoping that they're going to be there for at least a few years to get your worth out of the training period.

    Yes, a...lets say 1 year...temporary tax reduction may spur employement of people into jobs that are set to last for that 1 year, increasing a small temporary boost to unemployment.

    And then the reduction goes away and the people are layed off and all you've really done is kicked the can down the road. Smart politically for Obama if it'd get it past the election, but not helpful to the countries issues.

    The best way to make it sustainable is to eliminate it, and increase income taxes proportionally so that it's revenue-neutral. With unemployment over 9%, there are a lot more people willing to work than people willing to hire them, so it makes more sense to tax people on the money they earn than to tax employers on the people they hire.
    Do you honestly believe that they significantly increase the income taxes that employers aren't going to have to either raise the general pay they're offering for various jobs to keep experienced or skilled employees in them but instead will allow them to hire more people?

    In my previous job, had my income tax rate raised 50 to 100% of what it was at that point, the money I'd be making from that job wouldn't have been near enough to justify the work.

    I disagree with you in regards to the amount of people willing to work due to the unemployment rate. If the majority of these people wanted to work, regardless of what the job was, they'd be able to get jobs. The issue is people generally want jobs that roughly match their expectations of what they should be doing or making.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by donsutherland1 View Post
    From Bloomberg.com:



    Obama Team Eyes Employer Payroll Tax Break - Bloomberg

    That the White House is considering another round of stimulus is not too surprising given the persistent high rate of unemployment that is threatening to bump up against the 2012 electoral calendar. IMO, this stimulus should not be adopted for a number of reasons:

    1. It would further exacerbate the nation's long-term imbalances, not just a short-term increase in the budget deficits, as it would increase the long-term unfunded liability associated with Social Security.

    2. It would undermine any credibility of any fiscal consolidation agreement that might be attached to an increase in the debt ceiling.

    3. In macroeconomic terms, it would have only a marginal to small impact. First, the multiplier with such stimulus is well below 1. That means every dollar of this form of stimulus would yield less than a dollar increase in the GDP. Second, hiring depends on expectations about sustained increases in macroeconomic demand that productivity/capital investment cannot accommodate, making it necessary for firms to expand payrolls (a recurring expenditure). Third, companies remain especially risk averse coming out of the financial crisis/recession. Hence, savings from the payroll tax reduction would far more likely be used to bolster cash than to lead to a dramatic increase in new hiring.
    It may not spur hiring, but it would have a positive effect on a company's capital, thereby allowing them to re-invest into their company, which would make it easier to keep the employees that they have one the payroll.

    It would help my business tremendously.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by Objective Voice View Post
    I think I understand where you're trying to go here, but I think you have things mixed up abit.

    I'm not a businessman nor am I an accountant. So, someone who is I'd appreciate some clarification here.

    If you lower the regular tax rate (on individual wage earners), you reduce what people pay in taxes each year. But if you lower the payroll tax (for businesses), you reduce the quarterly payroll tax businesses pay on wages they pay to their employees. But wouldn't that also reduce the amount of taxes deducted from employee's paychecks thereby freeing up capital all around for everyone thereby putting more money in people's pockets thereby giving consumers more money to spend on commerce?

    If true, why wouldn't you want that to happen since the law of supply and demand (something taught in high school economics classes) is based on consumer spending? And if consumers are demanding more of a product, does it not stand to reason that manufacturers would make more of said product that's in high demand? Seems to me reducing the payroll tax would be a win-win all around for everyone - businesses, employees, our nation's creditors (since consumers would pay taxes on the goods and services they buy; the down side, of course, could mean many of us likely pay more taxes at the end of the year), politicians (because some hate tax increases)?
    You nailed it, brotha' man.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    I don't like this idea of corporate welfare at all. The idea of giving money to private businesses with the hope that they will turn around and hire people in exchange is just a variation on the gop's failed policy of trickle down... It failed under Reagan and Obama shouldn't fall for it either
    <font size=5><b>Its been several weeks since the Vegas shooting.  Its it still "Too Early" or can we start having the conversation about finally doing something about these mass shootings???​</b></font>

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by disneydude View Post
    I don't like this idea of corporate welfare at all. The idea of giving money to private businesses with the hope that they will turn around and hire people in exchange is just a variation on the gop's failed policy of trickle down... It failed under Reagan and Obama shouldn't fall for it either
    What Obama is proposing is not "trickle down". Its just a cosmetic BS gesture. Trickle-down worked marvelously under Reagan. Real trickle-down goes to increasing demand and lowering the cost of supply. Obama's idea of tax breaks is redistribution. Doesn't work. We got proof all around us.

    Obama couldn't shine Reagan's shoes. Or mine.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by donsutherland1 View Post
    From Bloomberg.com:

    Obama Team Eyes Employer Payroll Tax Break - Bloomberg

    That the White House is considering another round of stimulus is not too surprising given the persistent high rate of unemployment that is threatening to bump up against the 2012 electoral calendar. IMO, this stimulus should not be adopted for a number of reasons:

    1. It would further exacerbate the nation's long-term imbalances, not just a short-term increase in the budget deficits, as it would increase the long-term unfunded liability associated with Social Security.

    2. It would undermine any credibility of any fiscal consolidation agreement that might be attached to an increase in the debt ceiling.

    3. In macroeconomic terms, it would have only a marginal to small impact. First, the multiplier with such stimulus is well below 1. That means every dollar of this form of stimulus would yield less than a dollar increase in the GDP. Second, hiring depends on expectations about sustained increases in macroeconomic demand that productivity/capital investment cannot accommodate, making it necessary for firms to expand payrolls (a recurring expenditure). Third, companies remain especially risk averse coming out of the financial crisis/recession. Hence, savings from the payroll tax reduction would far more likely be used to bolster cash than to lead to a dramatic increase in new hiring.
    if this was done as some form of a tax rebate, then yes, it wouldn't have much effect. however, if this is a permanent rate reduction, then it will have a salutory effect. Not as powerful as if he were to adopt his own Bi-Partisan Debt Reduction Commission's tax reforms; but it would be positive.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by disneydude View Post
    I don't like this idea of corporate welfare at all. The idea of giving money to private businesses

    you heard it here, folks. punishing someone less than you were punishing them previously for the sin of creating jobs is "giving money to private business" and "corporate welfare".

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by apdst View Post
    It may not spur hiring, but it would have a positive effect on a company's capital, thereby allowing them to re-invest into their company, which would make it easier to keep the employees that they have one the payroll.

    It would help my business tremendously.
    I don't disagree that it would have a positive impact for companies. It would increase their cashflow. Some might invest that additional cash in capital purchases. A very small number might hire. However, as the tax break would be temporary, that factor would also inhibit its impact on hiring. In sum, the idea is being framed as a means for increasing hiring. Nevertheless, the impact would likely be quite marginal with respect to hiring.

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    Re: Obama Team Eyes Employer Payroll Tax Break

    Quote Originally Posted by cpwill View Post
    if this was done as some form of a tax rebate, then yes, it wouldn't have much effect. however, if this is a permanent rate reduction, then it will have a salutory effect. Not as powerful as if he were to adopt his own Bi-Partisan Debt Reduction Commission's tax reforms; but it would be positive.
    Everything I've read indicates that it would be a temporary measure. It would not be permanent.

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