Don't Cut the Payroll Tax Rate
There seems to be a bit of a boomlet lately among right-leaning economists in favor of a temporary cut in the payroll tax rate to stimulate employment. See here for example:
Apparently the idea of cutting taxes only for big corporations and rich people is not getting much traction these days, so those that think there is never a problem that can't be solved by huge tax cuts have switched their attention to a tax that average people actually pay.
Unfortunately, those advocating a payroll tax cut are ignorant of its nature--it's not a tax just like all the others because it is tied to a specific cash benefit program. In my opinion, the payroll tax is more of a forced saving measure than a true tax. For this reason a cut in the payroll tax is very unlikely to reduce unemployment and will only make Social Security's finances more precarious, as I explain in my Forbes column this morning: