Here’s a shock – Republicans and Democrats have agreed to extend the temporary payroll tax cut until the end of the year.
And in other news, apple pie will retain its status next to motherhood.
In politics, it’s all about perceptions. No one wants to be the killjoy who brings up tough questions or realities when you can instead make average people feel as thought they are getting something.
It kind of makes you wonder which Congress will have the guts to ever not extend this temporary tax cut, which, by the way, takes away money the Social Security program needs. Help workers just to hurt seniors? Not exactly. We’ll find the money to pay for all this. Heck, we can always borrow it.
Here’s an interesting “Fiscal facts” paper from the Tax Foundation. Titled, “Global Evidence on Taxes and Economic Growth: Payroll Taxes Have No Effect,” it argues there is no relationship between payroll taxes and long-term economic growth.
To grow economically, the nation ought to be cutting its corporate income taxes, which “have a highly significant and negative effect on long-term growth. “
The United States has among the highest corporate tax rates of the 34 nations in the Organization for Economic Cooperation and Development.
OECD research suggests that data from the decade of 2000 to 2010 shows that “cutting the corporate rate by 10 percentage points is associated with an increase in total real GDP growth of 11.1 percentage points …”
Economic growth would lead to more jobs and higher wages. It’s just that “Cut corporate taxes!” doesn’t make for a great campaign slogan in these times. It’s much easier to cut payroll taxes, pretend you don’t need the money and blame the other side for the slow economic recovery.