Thomas Oliver: How about a payroll tax holiday?

By Thomas Oliver

The Atlanta Journal-Constitution

The jobs bill appears to be falling apart.

However, a scaled-down Senate compromise would give employers a break from paying their portion (6.2 percent) of the Social Security tax for the rest of the year when they hire a worker who has been unemployed for more than 60 days.

I’d like to suggest we double down on that one.

Why not grant everyone -- employer and worker -- a payroll tax holiday? For six months.

If the Senate’s half-measure would stimulate hiring, a holiday would shift it into overdrive. It would act as a rebate, which are popular with certain members of Congress. It would also act as a tax cut for businesses, which is popular with the other group. We’re talking bipartisan here.

It’d be easy to administer, which if no one in Washington appreciates, the rest of us would.

And since all Social Security bookkeeping is a wink and a nod, the costs would represent just one more piece of worthless IOUs placed in the so-called lockbox. Note the lockbox is always prefaced with “so-called,” because 1) it doesn’t exist and 2) if it did, it surely was never locked.

Professor Jeff Rosensweig of Emory’s Goizueta Business School, while worried about the deficit, favors a stimulus that would make it cheaper for firms to create jobs. “A payroll tax holiday is a direct tool to do that, and should be applied ASAP,” he says.

Ralph Blanchard, who wrote “Creating Wealth with a Small Business” and who has run several businesses and now lives in Morgan County, says a payroll tax holiday wouldn’t benefit small businesses with few or no employees, which is the majority of small businesses.

Blanchard says not to expect much hiring from the tax break, but it might offer some incentive for employers to retain employees.

In other words, it might slow down some layoffs.

Russell Roberts, economist, author and George Mason University professor, e-mailed that he’d go me one better.

He’d eliminate the payroll tax altogether. The holiday is simply a rebate by another name, and he says they aren’t stimulative.

To balance the ledger, he’d eliminate all corporate welfare; cut 10 percent from every federal department; and make small across-the-board tax rate increases on all earners, including those lower-income workers who currently pay no income tax. Roberts says the lower-income earners would still come out ahead because the payroll tax is regressive and falls hardest on them.

He outlined these and more tax proposals in an essay in Forbes a year ago. It was pegged as a speech he would have liked the president to give.

Roberts’ was a better speech than the one we got. Instead, we got an eloquent explanation for the $787 billion stimulus a year ago last week. (By the way: a year’s payroll tax holiday would have cost about the same.)

If the stimulus were nearly as effective as they now claim, do you think they would need to try so hard to convince us?

I think they doth protest too much.