Op-Ed. Give America a Payroll Tax Cut. 26 December 2002. The Boston Globe.
IN THE LAST two years, nearly 2 million jobs have been lost, retirements have been postponed, and personal debt has increased. Long-term unemployment has doubled, the stock market has plunged more than 30 percent, we have seen the weakest level of economic growth and business investment in 50 years, and holiday retail sales are down 5.5 percent from last year.
The good news is that the Bush administration has finally acknowledged what Americans have known too well for too long: Our economy is hurting. But rather than change the policies that have led to us to slow growth, surging layoffs, a stagnant recovery, and a sliding stock market, President Bush has found a couple of new economic advisers - and swears that they will adhere to the same, tired economic policies of the previous regime.
It's not enough to fire the economic team; we need to fire up the economy.
With private investment and jobs on the decline and joblessness at a new high, this sluggish economy demands real solutions - solutions that provide relief for middle-class families and businesses today and restore confidence for tomorrow. Instead, just in time for Christmas, comes this holiday present from the Bush administration. R. Glenn Hubbard, the chairman of President Bush's Council of Economic Advisers, stated, "The increasing reliance on taxing higher-income households and targeted social preferences at lower incomes stands in the way of moving to a simpler, flatter tax system."
What President Bush's main economic adviser said was pretty clear: The wealthiest Americans pay too much in taxes, and middle-class Americans get too much help in paying their mortgage, giving to charity, and helping send their kids to college.
In the meantime, ordinary Americans are struggling to make ends meet and build for their family's future. The fact is that nearly three-quarters of all taxpaying Americans pay more payroll tax than income tax.
Since only some Americans pay federal income taxes, those who work but only pay payroll taxes or state and local taxes are often left out at tax-cutting time. Even last year's tax rebate, which Democrats had to scrape and claw to pass, left out 31 million of the hardest-working Americans and gave only partial help to 17 million more because Republicans refused to make it fairer.
If we are serious about stimulating the economy and providing middle-class tax relief, we need a tax cut that would put money in the hands of Americans who are most likely to spend it quickly.
Unlike most so-called stimulus plans, a payroll tax holiday would help every working American. That is why I have called for immediate action on a payroll tax holiday on the first $10,000 of wages. This proposal would give every worker a tax cut of up to $765 and every family with two income earners up to $1,530. Every working American would receive a tax break as soon as the IRS could mail the check. The plan would be paid for out of general revenues, so it wouldn't touch a dime slated for Medicare and Social Security.
Middle-class Americans are working hard to pay for rising health care premiums, meet mortgage payments, and cover heating bills. They need government tax policy to be on their side, not on their backs. A waitress with two kids making $20,000 won't get any help from an extended Bush income tax cut because she doesn't pay any federal income tax. However, she pays more than $1,500 in payroll taxes every year, and she could sure use a break on that regressive tax.
Her family - and middle-class families like hers - could use a boost and could help boost our economy. Does the Bush administration really believe that it is families like these that are getting the breaks from our current tax system? Judging by their own words, they really want our waitresses, teachers, and firefighters to shoulder more of the burden.
In the Christmas classic "It's a Wonderful Life," Mr. Potter argues that "the working class" shouldn't receive any help from Bailey Building and Loan but instead wait and save before they could buy a home.
"Wait! Wait for what?" asks George Bailey. "Until their children grow up and leave them? Until they're old and broken down?"
Americans need tax relief so they can pay for their mortgages, college tuition, and retirement. They need tax relief now to make ends meet in this sputtering economy. In turn, they will help the economy grow - they always have. As George Bailey also said, they "do most of the working and dreaming and living and dying" in this country - they're also the backbone of our economy. Let's help them. George Bush meet George Bailey.