Opinion of a temporary payroll tax cut.

[Nightcore Nationalist]

I've heard this idea being floated around as a form of tax relief due to the Wuhan virus by suspending the payroll tax temporarily to help mitigate economic damage.


On principle, I'm against it because it's incredibly regressive and I'm against any sort of tax policy that's regressive in nature.  Plus it's bad optics.  That said, if it actually did have a significant, tangible economic impact I would be willing to support it, but I'm skeptical.

[DC Al Fine]

High earners don't pay FICA, so any FICA relief would be progressive, no?

Anyway, to answer OP's question, I'm not against it per se, but there are better ways to spend that money. The main aims of any relief should be to help those who can't work due to COVID-19 (which a payroll tax cut wouldn't help), and to make it financially easier for citizens to comply with public health diktats (again, doesn't help people who ought to stay home but choose not to for financial reasons).

With that in mind I would suggest targeted payments to those affected by COVID, and if that is too slow or bureaucratic, issue crisis relief payments to everybody and add a line on next year's tax return to recover some from high earners who didn't need it.

[courts]

i don't like it

[AGA]

It would take too long to have an effect. Government spending is better.

[brucejoel99]

It wouldn't help workers who need federal assistance the most.

[MarkD]

Leave the SS revenue stream alone; it's in enough trouble as it is.

[Sam Smith]

I refer the repealing the payroll Tax with Tariffs!

[Orwell]

I refer the repealing the payroll Tax with Tariffs!

So replacing the income generated by the payroll tax with a raise in tariffs?

That's around 1/3 of all US Government revenue or 1.2 trillion which is around 5% of our GDP.

According to the Wall Street Journal through June 2019 the US government collected about $60 billion in tariffs so if we assume that it 2x by the end of the year that's $120 billion.

So all we need to do is increase those tariffs by 10x to make up for the lost revenue from repealing FICA, and Yahoo Finance, "Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs" and "The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution, and retail."

So let us assume that the legislation to replace the payroll tax with tariffs went into place on January 21, 2017. As of September of 2019 when that article was published the Trump trade war had destroyed 300,000 jobs, so let's multiple that figure by 10x and we get 3,000,000 and as of June 2018 there were 6 million people unemployed, so adding another 3 million to that gives us 9 million unemployed.

TL;DR Payroll tax is a lot better than financing that sh!t through tariffs

[Sam Smith]

I refer the repealing the payroll Tax with Tariffs!

So replacing the income generated by the payroll tax with a raise in tariffs?

That's around 1/3 of all US Government revenue or 1.2 trillion which is around 5% of our GDP.

According to the Wall Street Journal through June 2019 the US government collected about $60 billion in tariffs so if we assume that it 2x by the end of the year that's $120 billion.

So all we need to do is increase those tariffs by 10x to make up for the lost revenue from repealing FICA, and Yahoo Finance, "Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs" and "The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution, and retail."

So let us assume that the legislation to replace the payroll tax with tariffs went into place on January 21, 2017. As of September of 2019 when that article was published the Trump trade war had destroyed 300,000 jobs, so let's multiple that figure by 10x and we get 3,000,000 and as of June 2018 there were 6 million people unemployed, so adding another 3 million to that gives us 9 million unemployed.

TL;DR Payroll tax is a lot better than financing that sh!t through tariffs

A 20% Import Tax would generate 570 billion in revenue.
Thats enough Government for the Government.

[Orwell]

I refer the repealing the payroll Tax with Tariffs!

So replacing the income generated by the payroll tax with a raise in tariffs?

That's around 1/3 of all US Government revenue or 1.2 trillion which is around 5% of our GDP.

According to the Wall Street Journal through June 2019 the US government collected about $60 billion in tariffs so if we assume that it 2x by the end of the year that's $120 billion.

So all we need to do is increase those tariffs by 10x to make up for the lost revenue from repealing FICA, and Yahoo Finance, "Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs" and "The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution, and retail."

So let us assume that the legislation to replace the payroll tax with tariffs went into place on January 21, 2017. As of September of 2019 when that article was published the Trump trade war had destroyed 300,000 jobs, so let's multiple that figure by 10x and we get 3,000,000 and as of June 2018 there were 6 million people unemployed, so adding another 3 million to that gives us 9 million unemployed.

TL;DR Payroll tax is a lot better than financing that sh!t through tariffs

A 20% Import Tax would generate 570 billion in revenue.
Thats enough Government for the Government.

Is this 20% import tax going to be the sole funding for the government? If so, may I ask how mandatory spending requirements are supposed to be met? It's like the federal government can just tell people Social Security is no longer going to be sending them monthly checks, or that they no longer have Medicare or Medicaid due to those programs being abolished. The money in the Social Security Trust fund is not the US governments, but the people who paid into the fund over their decades of work. Also, what would your ideal federal budget look like, for military spending, and the funding for the individual cabinet secretaries, the military would need to be greatly reduced in scope if this $570 billion were to be the only income for the federal government. 

[Sam Smith]

I refer the repealing the payroll Tax with Tariffs!

So replacing the income generated by the payroll tax with a raise in tariffs?

That's around 1/3 of all US Government revenue or 1.2 trillion which is around 5% of our GDP.

According to the Wall Street Journal through June 2019 the US government collected about $60 billion in tariffs so if we assume that it 2x by the end of the year that's $120 billion.

So all we need to do is increase those tariffs by 10x to make up for the lost revenue from repealing FICA, and Yahoo Finance, "Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs" and "The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution, and retail."

So let us assume that the legislation to replace the payroll tax with tariffs went into place on January 21, 2017. As of September of 2019 when that article was published the Trump trade war had destroyed 300,000 jobs, so let's multiple that figure by 10x and we get 3,000,000 and as of June 2018 there were 6 million people unemployed, so adding another 3 million to that gives us 9 million unemployed.

TL;DR Payroll tax is a lot better than financing that sh!t through tariffs

A 20% Import Tax would generate 570 billion in revenue.
Thats enough Government for the Government.

Is this 20% import tax going to be the sole funding for the government? If so, may I ask how mandatory spending requirements are supposed to be met? It's like the federal government can just tell people Social Security is no longer going to be sending them monthly checks, or that they no longer have Medicare or Medicaid due to those programs being abolished. The money in the Social Security Trust fund is not the US governments, but the people who paid into the fund over their decades of work. Also, what would your ideal federal budget look like, for military spending, and the funding for the individual cabinet secretaries, the military would need to be greatly reduced in scope if this $570 billion were to be the only income for the federal government. 

Social Security,Medicare & Medicaid are unconstitutional & they should be elíminated.

[Orwell]

I refer the repealing the payroll Tax with Tariffs!

So replacing the income generated by the payroll tax with a raise in tariffs?

That's around 1/3 of all US Government revenue or 1.2 trillion which is around 5% of our GDP.

According to the Wall Street Journal through June 2019 the US government collected about $60 billion in tariffs so if we assume that it 2x by the end of the year that's $120 billion.

So all we need to do is increase those tariffs by 10x to make up for the lost revenue from repealing FICA, and Yahoo Finance, "Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs" and "The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution, and retail."

So let us assume that the legislation to replace the payroll tax with tariffs went into place on January 21, 2017. As of September of 2019 when that article was published the Trump trade war had destroyed 300,000 jobs, so let's multiple that figure by 10x and we get 3,000,000 and as of June 2018 there were 6 million people unemployed, so adding another 3 million to that gives us 9 million unemployed.

TL;DR Payroll tax is a lot better than financing that sh!t through tariffs

A 20% Import Tax would generate 570 billion in revenue.
Thats enough Government for the Government.

Is this 20% import tax going to be the sole funding for the government? If so, may I ask how mandatory spending requirements are supposed to be met? It's like the federal government can just tell people Social Security is no longer going to be sending them monthly checks, or that they no longer have Medicare or Medicaid due to those programs being abolished. The money in the Social Security Trust fund is not the US governments, but the people who paid into the fund over their decades of work. Also, what would your ideal federal budget look like, for military spending, and the funding for the individual cabinet secretaries, the military would need to be greatly reduced in scope if this $570 billion were to be the only income for the federal government. 

Social Security,Medicare & Medicaid are unconstitutional & they should be elíminated.

What about all the money all those millions of people have already paid into these programs what should be done about that? and if we eliminate all mandatory spending it still leaves us with a large deficit on the side of purely discretionary spending. 

[cris01us]

What about all the money all those millions of people have already paid into these programs what should be done about that? and if we eliminate all mandatory spending it still leaves us with a large deficit on the side of purely discretionary spending. 

That is a very valid point...what about all those millions that have been paid in by millions of Americans?  I would say the best way to go about it would be to phase out SSI payments as well as SSI taxes taken in.  People already collecting will continue to, folks in certain age brackets will receive less than anticipated, but still something.  Phase it down to where someone born now won't pay into it or receive it at all. At the same time you could partially privatize it so as to try to offset the reduced payouts until the program is gone. 

I grant you, that's not a great solution...not even a good one probably, but there are economist out there who could surely think of a way to do this.  I am happy to not pay another dime into it this instant and never receive a payment if it meant it would go away.  The government can even keep the 20 odd years of money I've already given them.  But that's just me.

[Fuzzy Bear]

I'm opposed to such a cut.

I think the payroll tax should apply proportionally to high earners as well.

[Fubart Solman]

Doesn’t help people who are out of a job. Horrible idea.

[Okay, maybe Mike Johnson is a competent parliamentarian.]

I agree with the emerging consensus that this idea is a non-starter, and I think it might also be a Trojan horse to undermine Social Security the way pension pre-funding did with the Postal Service.

[Badger]

Remove the taxable income cap, and lower the overall rate, permanently.

[True Federalist (진정한 연방 주의자)]

Remove the taxable income cap, and lower the overall rate, permanently.

So you want to reduce the amount of FICA paid overall?  There aren't that many people who exceed the current cap and many of those are in situations where they can shift income to forms not subject to FICA. Plus, while there are adjustments to keep it from being linearly proportional, the amount you receive from Social Security is based on how much you put in, so you'd also be shifting future payments to be higher for the upper classes and less helpful to the lower classes who are less likely to have private retirement funds to draw upon.

One can reasonably make an argument for raising and/or eliminating the taxable income cap, and or expanding FICA to cover more forms of income, but given the current fiscal projections, I don't see where one can reasonably call for reducing rates right now unless you intend on reducing payments as well.