Journal Community


Explore Group

Should a 2% payroll tax cut be extended to stimulate the economy?


The tax cut reduced an employee's share of the Social Security payroll tax to 4.2% from 6.2% for 2011, at a cost to the government of $111.7 billion. Some economists say the payroll tax would likely provide a small boost to growth by increasing the amount of cash workers have to spend, putting an extra $1,000 in the average worker's pocket this year. In theory, that extra spending should prompt more hiring to meet the extra demand for goods and services. What do you think? Is that boost worth extending, or is the cost too high?

(See more polls, discussions and hot topics.)

Recommend a comment by clicking the recommendation icon

    The entire gumment and all its programs need to be overhauled intelligently. Our wounds are too severe for mere band-aids now.


  • Real wages have been falling for most Americans as productivity has risen.

    The data is clear.

    There is a lot at stake here; Main Street is at risk.

    The middle class weakened over the past several decades because the rich secured the lion’s share of the economy’s gains. The share of pretax income earned by the richest 1 percent of Americans more than doubled between 1974 and 2007, climbing to 18 percent from 8 percent. And for the richest of the rich—the top 0.1 percent—the gains have been even more astronomical—quadrupling over this period, rising to 12.3 percent of all income from 2.7 percent.

    In contrast, incomes for most Americans have been nearly flat over this same time period, and median income after accounting for inflation actually fell for working-age households during the supposedly good economy in the recovery between 2001 and 2007.
    How far can the Middle Class sink before Americans cities burn?

    If you are Middle Class,

    1 Recommendation


      I couldn't agree more that the middle class is being massively damaged, but I think its the Government not the rich that is doing it do them. Partially by crushing taxing, poor job mobility, and debt accumulation - devaluations that is, of both the currency, and house prices. Your percentiles of the top 1% and .1% having doubled and quadrupled shares of income, though, does not mean more of the income.

      In a percentile distribution list taken in one year, and then in another year, 13 years later, does not directly measure if a percentile has a bigger share if we are seeing the populations in the percentile's grow. . In Fact if all groups grow in numbers and average income, with the top 1 percent growing in numbers without growth in average income, you will get the same result. The share of come by the top Percentile will double and the same measure for the lower percentiles that have more people in them, even with higher average incomes, could drop depending on the configuration of earnings increases,

      The large multiples of top earners income compared to middle earners is sufficiently large that a number of new top earners, even if it brings the group's average down, will increase that groups percentiles. A larger proportional change in average income in Middle Groups, and with more of them, will still see their percentiles drop.

      So an optimistic economic change with the middle increasing their average earnings and there also being an increase in more of them, could still give a worse percentile performance with just a modest increase in the number of the rich. In other words, good economic development, bad distribution percentiles.


  • It's a stupid way to stimulate the economy as it has to be paid back later with higher rates if we are to keep social security healthy. People with jobs do not need incentives like a payroll tax reduction or the $400 credit for working. They might just as well reduce the amount that people are allowed to put in 401/3Ks as that would give them more spending money but reduce their retirement income later.

    2 Recommendations

  • This is indeed a band-aid.
    The benefits are minimal.
    It adds to the debt and threatens social security.
    A poor excuse for real leadership.
    For a similar expense we could restore the 'public estate'.

    1 Recommendation

  • Money helps but what consumers and investors need is confidence.


  • Hey Mr. President, that's my money your giving away! And my grand kids money. Not yours or the "governments".
    Signed - One of the group that's paying 60% of Federal Income taxes.

    1 Recommendation

  • The payroll tax holiday for individuals was a bad idea. Yes, it put money in the pockets of workers, but most saved it and it wasn't a true stimulus. The short-term benefit was not enough to get people to make long term purchases. Also, the problem facing the economy is lack of hiring (jobless recovery) and lack of business confidence due to regulatory encroachment.
    I also agree with the liberals on the issue of taking money from a program (SS) that will soon be cashflow negative.
    In summary, it was a poorly designed stimulus and it did not work.


  • A resounding no. Payroll taxes are the only direct federal tax many people pay - those who pay no income tax. This will be as effective as the cash for clunkers (perhaps running consumption up just a mite) for exactly as long as the government pays for things then we will just be left with more debt.

    There will be zero incentive to hire people for what is already a known economic temporary slight hint of a blush for a short time then a sudden collapse and then you are stuck with the cost of laying off employees yet again.

    The money will not be used to build businesses - people who pay payroll taxes only are not likely to build businesses.

    If we want a jobs bill then cut spending, reduce regulation and restructure the tax code, simplify it so everyone pays and cut business tax - preferably to zero but a start would be bringing it down in line with what most other nations tax their businesses.

    It isn't that we don't know what to do, its that one party is intent on maintaining the growth of government as a portion of GDP while the other is only half willing to devolve power. There is no real consensus in Washington for anything that is a real job creation move because what is good for the US is not good for politicians. So, don't hold your breath.

    1 Recommendation


    Definitely Yes.! Make it 5%. It won't stimulate the economy, thinking so is plainly stupid, but I follow my version of the Reagan rule - I never criticize a tax cut.



    I vote to dissolve Social Security tax entirely. Why pay into a system that won't be there when I need it? Paying for it now, and not having it is an outrage that needs to be considered illegal and I think somewhere down the line we need to sue our government for mishandling our money (i.e syaing it will be used for one thing but in turn used for another that wasn't "agreed" upon by the American people).


To add a comment please
Create an Account

Your real name is required
for commenting.

  • Clear
  • Post
Your Profile Here…

Set up your profile to connect with members of Journal Community.


Your Groups Here…

