In cutting payroll taxes to spur the economy, Trump would be following in Obama's footsteps
by Nihal Krishan
| March 11, 2020 12:00 AM
In pitching a payroll tax cut to ease the economic anxieties related to the coronavirus, President Trump is following in the footsteps of President Barack Obama, who cut payroll taxes in the wake of the financial crisis to increase demand and boost the recovery.
Yet Obama's payroll tax cuts saw only mixed success, and veterans of his administration say they would have done the stimulus differently if they could.
"I continue to think it was the best we could do at the time given the political constraints. But it was far from optimal then and would be even further from optimal now," tweeted Jason Furman, a professor at Harvard University and a former economic adviser to Obama who was involved in the negotiations in 2011 and 2012 that resulted in the employee payroll tax being reduced to 4.2% from 6.2%.
The problem with a payroll tax cut, Furman said, is that it would not necessarily benefit the people most vulnerable in the coronavirus outbreak. He gave the example of a one-year payroll tax cut of two percentage points: That measure would provide up to a $5,508 tax cut to a high-income couple, but only $500 to a single parent making $25,000 a year, and no relief for workers placed on leave without pay.
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https://www.washingtonexaminer.com/policy/economy/in-cutting-payroll-taxes-to-spur-the-economy-trump-would-be-following-in-obamas-footsteps