Taxes

A Payroll Tax Holiday Is No Free Lunch

Forgiving payroll taxes is a bad way of stimulating the economy and would leave Social Security benefits underfunded.

|

A few weeks ago, President Donald Trump proposed a payroll tax holiday to Americans earning less than $100,000 per year. The gesture is better described as a deferral of the payroll tax burden until April 2021. That has some people worried, and they should be.

Talking about his plan, the president explained, "In a few moments, I will sign a directive, instructing the Treasury Department to allow employers to defer payment of the employee portion of certain payroll taxes from Sept. 1." The deferral will last until the end of 2021. As the president added, "This will mean bigger paychecks for working families."

An actual payroll tax holiday does mean an increase in take-home wages for some. According to recently published Internal Revenue Service (IRS) guidance on the president's order, employers can temporarily stop withholding the employee's 6.2 percent share of Social Security taxes for workers earning under $104,000 per year. That means more money in their paychecks for those eligible workers.

This could be significant. A little-known fact is that, for a majority of American taxpayers, the largest share of their federal tax bill is the payroll tax, not the income tax. In the way it's designed, the payroll tax is regressive, so it hits lower-income earners harder. But a temporary reprieve is pretty much where the good news ends for the employees.

For one thing, as noted, the benefit may be short-lived. According to the IRS, unless Congress decides to go ahead and forgive the tax, it will eventually need to be collected by employers and sent to Uncle Sam. This is guaranteed to become a massive headache for employers, who will ultimately have to collect the deferred taxes from their employees. As a result, some large companies such as UPS have already announced that they will continue to collect the payroll tax from their employees and send the money to the federal government as usual.

Second, Congress could go ahead and decide to forgive the tax as part of a future coronavirus-relief package. However, short of any other adjustments, that's a bad idea. For instance, no matter how some may try to present the move, it won't stimulate the economy. Data from the Congressional Budget Office show that tax cuts geared to lower- and middle-income earners return one-third in economic growth of what they cost in lost revenue.

That leads me to my third issue with the policy. I am all in favor of letting taxpayers keep more of their money than they used to. I like my government bill as small as it can be. But that's only if you offset the reduction in tax revenue with a reduction in spending in general, or Social Security benefits in particular. You see, the portion of the payroll tax that would be cut is collected to fund spending on Social Security benefits for current retirees. It's also part of the process for current employees to become eligible for Social Security benefits in the future.

I understand that people don't like to pay the payroll tax. But it should go without saying that if you stop paying the tax that funds the Social Security system, you should pair it with an equivalent reduction in benefits. If that doesn't happen, then the benefits for Social Security will have to come from the general funds, which is what happened during past payroll tax holidays. That means that the federal government will have to borrow the money and expect future generations to pay the bill plus interest.

Unfortunately, politicians are so shortsighted that this is probably where we're heading. Think about it this way: If Democrats perceive (as they likely do) that this move by the president is just meant to buy some votes in November, they will oppose any attempt to pass legislation that forgives the tax. However, as some point out, those tax deferrals will eventually become due, and employers may then have to withhold twice the amount of payroll taxes from employees' paychecks starting in January.

This will create quite a bit of pressure on Congress to waive the deferred taxes next year. But even if that happens, somebody somewhere at some point will have to pay. There's no such thing as a free tax holiday.

NEXT: Going Rogue

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. My understanding is that the social security fund is nothing but IOU’s and benefits get paid from the general budget. But I’ll admit I don’t know if that’s true.

    1. You are exactly right. There is no S.S fund, the gas taxes don’t go to a highway fund. It’s all a shell game. LBJ I believe was the one who added the payroll tax in to the general fund. Here in Ohio, the lottery was sold to fund education, it al so goes into the state’s general fund.

      1. LBJ did not add payroll taxes to the general fund. The trust fund has always taken payroll taxes and invested in government bonds, with those payroll tax proceeds going into the general fund. LBJ’s administration simply changed the accounting. The federal budget was made into a unified budget in which Social Security transactions were included. Prior to that the Social Security budget was reported separately from other parts of the federal budget. Later the budget was again un-unified.

        1. Make $6,000-$8,000 A Month Online With No Prior Experience Or Skills Required.FDv Be Your Own Boss And for more info visit any tab this site Thanks a lot just open this link…..

          ========== CashApp

        2. Forgiving payroll taxes is a bad way of stimulating the economy

          As opposed to the “good ways” of stimulating the economy? What kind of b.s. libertarianism is that?

          and would leave Social Security benefits underfunded.

          We have reached peak stupid for Reason. But I’m sure it’s temporary.

          1. The trust fund has always taken payroll taxes and invested in government bonds, with those payroll tax proceeds going into the general fund.

            Those government bonds are used for government spending, and their interest is backed by taxpayers. The net effect is that social security is simply paid for by taxes and that there is no “trust fund”.

            Worse yet, unlike government pension schemes in other countries, where payouts are lowered when the government can’t pay, using the “government bonds” accounting trick makes sensible fiscal policy harder.

            It’s a gigantic pyramid scheme. You have to be rather gullible not to see it.

    2. It’s true. There is nothing in the fund other than IOU’s from other departments within the federal government (i.e. bonds). Those bonds get paid from the general fund. The “trust fund” is essentially only an accounting system that measures how much has been taken in from payroll taxes vs. how much has been paid out in benefits. It’s like you starting a college fund by taking $1,000 per month from your paycheck and depositing it in your piggy bank. Then you take those “proceeds” and deposit them in your checking account, and in return place an IOU from your checking account into your piggy bank. After a few years of this you have thousands of dollars in your college fund, made up of nothing but IOUs. Do you have anything in your checking account to back them up? Who knows? – it depends on what you did in your checking account over that time. In the case of social security, there’s nothing in the checking account, because the federal government has no net money – it’s deeply in debt. The trust fund can only be repaid to the extent that the federal government can run surpluses (fat chance), borrow more, or print money.

    3. Social Security is one big IOU scam.

      You pay into Social Security NOW.
      The government “promises” to pay you some benefit later.

      See what happened to pensions? Hopefully the same thing happens to Social Security.

      1. The problem is we have continued to pay into it for, what, about 85 years now (?), with no discernable return (I know, pyramid scheme base and all that).

        I seem to recall W touting a new scheme where we could all direct our investments. That was a load of crap, obviously.

      2. It’s worse than a scam.

        If Social Security were paid directly out of the general fund, Congress could cut it. By going through the accounting mechanism of government IOUs, that’s a lot harder.

        What Congress can (and should!) do is raise the Social Security age eligibility substantially to account for longer life expectancies.

    4. You are correct. 100% of money paid is spent immediately on current benefits and when there was a surplus it went into the general fund and was also spent immediately with the general fund then “owing” the SS fund. This is as required by the original charter of SS signed by FDR and you can see it at SSA.gov
      Future taxpayers will pay all future benefits some from payroll tax and some from income tax. Much like saying some from their right pocket and some from their left pocket. There is zero savings/investment of SS funds. Simply a tax and spend that gets worse for every succeeding generation.

    5. Benefits don’t come from the retiree’s account, because there is no individual account, and no collective account aside from a bag of IOUs drawn on future generations – but most of the benefits are paid by _younger people’s_ current Social Security taxes. When the receipts exceeded the outgo, the excess went into the general fund. When the SSA is running in the red – which it must be in the current depression – the shortage is made up from the general fund. Usually these adjustments are only a few percentage of the SSA budget, but if they stop collecting the payroll taxes….

  2. Letting people keep what they earn is the libertarian capitalist dream, and social security is a socialist wealth redistribution program which should be underfunded if it can’t be eliminated. President Trump has acknowledged that he can’t eliminate the payroll tax for social security without Congress’ help, only suspend its collection–and he’s using this as a campaign issue. He’s promised to fight Congress to make the social security payroll tax go away. Am I dreaming?

    It’s the libertarian capitalist dream to have a president campaign on eliminating the social security payroll tax. I don’t know what’s stranger, seeing it actually happen or seeing my fellow libertarians oppose eliminating it for absurd reasons.

    Sometimes I feel like Stephen before the Sanhedrin. He told them their job was to watch out for the Messiah, and when he came, they found him–and they crucified him. It made them so angry to hear Stephen say that, they dragged him outside and stoned him for saying it. Is President Trump the messiah? Of course not. But eliminating the social security payroll tax is the libertarian capitalist dream.

    Peter Suderman opposed President Trump when he was fighting to cut $772 billion from Medicaid, too. There’s never been a president who tried to cut the cut $772 billion from Medicaid, single-handedly eliminated a $1 trillion bailout of the states, and campaigned on eliminating the social security payroll tax.

    These kinds of opportunities only present themselves in crises. Thank goodness President Trump let this crisis go to waste in terms of denying the Democrats a state pension bailout. And if he’s using this crisis to do things like campaign on starving social security of funding, I say we reelect the obnoxious bastard. When is anybody likely to fight for this again?

    If we’re not in favor of slashing funding for socialist entitlement programs and letting workers keep the money they earn instead, then what do we mean when we call ourselves capitalists? if you’re all in favor of from everyone according to their ability, to everyone according to their need–I’m here to tell ya, that ain’t capitalism.

    1. Ken, Social Security is Non-Discretionary Spending. Trump can do all he wants to avoid bringing in revenue, but it won’t stop the fact that we have to pay out these benefits.

      This really is bringing in a crisis, and while I understand the sentiment, is it really that hard to see why a libertarian would find a problem with the methods? TANSTAAFL is a core libertarian mantra and Trump is grinding it into the ground. He isn’t doing us a service, he is telling a bunch of people that they can still have Social Security and Medicare ***and*** they don’t even have to pay for it. How is that at all different from what the Dems have done for years?

      Ken, I hate to say this, but you really are pissing on my leg and telling me its raining. I don’t want a Biden- er, Harris- presidency. But this is bullshit. You act like Trump is starving the beast, but he is actually ushering in the day where they nationalize our 401(k). A Dem will be president in the next 0 – 8 years, and they will absolutely use the dire position of our entitlements to fuck over every single person who ever produced something of value in their life. If you think letting Trump continue on this path does anything other than push that date 4 years (while increasing the penalty), you are nuts.

      1. “Ken, Social Security is Non-Discretionary Spending. Trump can do all he wants to avoid bringing in revenue, but it won’t stop the fact that we have to pay out these benefits.”

        The government will never be so flush with cash that they decide to cut spending. That’s an absurd fantasy that not even the Keynesians will entertain. The government has no marginal propensity to save, right?

        They will only cut spending when they have no other choice. Depriving them of revenue gives them less and less choice but to cut spending.

        The solution to drunken sailors spending all of our money is not to keep them well-funded. Someday, inflation may rear its ugly head again, and the rise in interest expense may help crowd out other spending. In fact, that’s probably what needs to happen in order for the federal government to cut spending.

        I hear this argument all the time about Prop 13. If only California had more money to spend, they wouldn’t spend so much of our money? No. If they had more of our money to spend, they would have spent all that revenue in addition to what they could borrow.

        Recessions are the perfect time to cut payroll taxes, socialist entitlement programs are the perfect thing to cut, and after we’ve cut payroll taxes, we should start looking at other taxes to cut.

        Meanwhile, if social security spending isn’t discretionary, the eligibility requirements are. If they’d rather not touch the third rail of politics, then they’ll have to find discretionary spending to cut to make room for social security. Tough choices need to be made, and the only time they will ever be made is when the government is deprived of revenue. Depriving them of revenue is a necessary step to cutting spending.

        1. I find your argument compelling.

        2. Someday, inflation may rear its ugly head again, and the rise in interest expense may help crowd out other spending.
          Interest on the debt is already $375B and is approaching 10% of federal spending. “Discretionary” spending is down to 30%. The US Government primarily transfers wealth and pays interest on the debt.

          1. In early years (2016ish), Trump talked about federal debt holders needing to take a haircut. Bankruptcy is no big deal to him.

            1. Citation fell off.

              1. Goodness! Look who’s asking for citation suddenly!

              2. “I would borrow knowing that if the economy crashed, you could make a deal.”
                https://www.cnbc.com/2016/05/06/donald-trump-on-us-debt.html

                1. Haha. That is not what the article is about.

                  Good old Lefties twisting Trump discussing what he WOULD do if the economy crashed from congressional debt spending and Commies accusing Trump OF ACTUAlLY crashing the economy.

                  MAGA

                  1. I get paid more than $120 to $130 per hour for working online.MIc I heard about this job 3 months ago and after joining this i have earned easily $15k from this without having online working skills.

                    This is what I do……. Cashapp1

        3. I guess you didn’t get my point from my drunken ramblings yesterday. You envision a scenario where we have so little money that some Democrat/GOP will finally get serious about the budget. I foresee the day when a Democrat gets into power and nationalizes our 401(k)s.

          You say that California’s Prop 13 is a good example of the nature of governments, and I agree. And the cold hard fact is that California is nowhere near cutting its spending. 1) They passed a tax on the rich 5 years ago. 2) They currently have an amendment on the ballot to eliminate Prop 13 for commercial properties. 3) They are sniffing around the federal government for a bail out.

          The government will do nothing to reign in costs- only find a different source of revenue.

          So fine, be happy that Trump is buying votes to win. But don’t say that starving the beast is going to work. They have said that for 20 years, and all that has happened is the deficits have gotten worse at the federal level, and at the state level, taxes have gone up when the deficits could no longer be tolerated.

          1. “You say that California’s Prop 13 is a good example of the nature of governments, and I agree. And the cold hard fact is that California is nowhere near cutting its spending. 1) They passed a tax on the rich 5 years ago. 2) They currently have an amendment on the ballot to eliminate Prop 13 for commercial properties. 3) They are sniffing around the federal government for a bail out.”

            I cited some facts below. Take a look at them.

            “Gov. Gavin Newsom last week signed a fiscal 2021 budget balanced by massive cuts, including $2.8 billion in state worker salaries and $1.7 billion in state support for higher education.”

            https://www.cnbc.com/2020/07/07/states-in-fiscal-crisis-cuts-to-basic-services-loom-due-to-pandemic.html

            Those are the very last things they wanted to cut. And if the alternative to cutting more spending in the future is raising taxes (by soaking the rich or repealing Prop 13), then why is it wrong to suggest that cutting taxes further will lead to more spending cuts?

            If raising taxes is the alternative to spending cuts, then why isn’t cutting taxes conducive to spending cuts?

            There are some differences between California and the federal government, but as we’ve said, there are negative consequences to spending when we ignite inflation with federal borrowing and spending, too–including the fact that the interest expense starts crowding out discretionary spending. At both the state and federal level, the first step to cutting spending is the same–we start by cutting taxes. When the government has no alternative but to make tough choices, that’s when they’ll start making the tough choice to cut things like government payrolls.

            1. This is my argument as well. We have example after example of tax increases solely go into more spending, not debt reduction. It is heroin to legislatures to give them a bigger tax base. We have such overwhelming proof of this. At this point the only option is to starve the beast. All paths lead to overwhelming debt at this point. Feeding the government more taxes is simply flattening the curve. Bankruptcy will still happen, just delayed for a bit. In the meantime your rights have been heavily restricted as government takes more and more from you.

            2. P.S. President Trump pulled the rug out from under the Democrats’ $1 trillion bailout of the states when he extended unemployment benefits without any compromise with the Democrats that control the House.

              The reason the Republicans stopped negotiating on the stimulus package was because they no longer felt compelled to extend unemployment benefits once President Trump extended it for them. Right now, the alternative to the Democrats’ $3.5 trillion stimulus bill (with $1 trillion for the states) is nothing. And that’s the way it’s likely to stay until they drop their proposal to send $1 trillion to the states.

              If Biden is elected, the Democrats will probably get their bailout for the states.

              If President Trump is reelected, that bailout will probably never come. He’s risking not being elected over his refusal to bail out the states. Why would bail them out if and after he’s reelected?

          2. Your argument here is basically “it could get worse, so let’s settle for bad.”

            It is strange. If biden nationalized 4p1ks, there are civil avenues and you will see a huge uprising. Most companies now transitioned to 401ks, so taking them to fund public employees would outrage most.

            Likewise you stated ” we have to pay out these benefits.” Which is not a legal truism. They can take away benefits at any point.

            1. That last statement is a dead-on, incontrovertable fact…if you doubt this, look at the front page of you annual SS statement.

          3. Gotta agree with you here, Overt. I’m very receptive to any move that ends up with the government taking less of my money, but inevitably, they end up taking it anyway from my children, my savings, and my children’s savings. I’m partial to the mantra “fuck you, cut spending.” Anything else is theatrics.

            You can cut off the cashflow to drunken sailors, but it won’t make a damn bit of difference when they have no limit platinum credit cards.

            1. Of course, all spending is tax. Whether it’s paid now, deferred, or paid through inflation it will be paid for at some point. It’s a basic law summarized by TANSTAAFL.

              But that’s an economic theory, not a political one. Ken is arguing the politics, not the economics. He’s correct that there is no indication that any additional debt will cause Congress (or this President for that matter) to cut spending. Just look at how much debt they willingly piled on us this year. Whether it’s Trump’s ultimate goal through 3D chess or not, the best way to enact change at the federal level is to blow up these programs. The best way to do that is to starve the beasts of revenue.

              1. “the best way to enact change at the federal level is to blow up these programs”

                That’s a very optimistic projection of how things might go. As it stands, we continue to foster dependency among people (SS, Medicare, etc.), while simultaneously absolving them of responsibilities (payroll taxes). When shit finally hits the fan, and the house of cards falls, I don’t believe for a second that the general populace and those in power will suddenly find their individualist, prudent, self-reliant principles. That’s the kind of circumstance in which literal communist/fascist/totalitarian revolutions occur.

            2. There is a limit on their platinum credit cards. Part of it is cutting their source of revenue. Part of it is the negative consequences of overspending.

              Recently, the world has been buying our debt because we were one of the prettiest horses in the glue factory. They were still buying German debt at negative interest rates last I checked. There is a finite supply of money that wants to do that, and they’re only willing to do it under certain circumstances and for a limited time. You go into safe harbors to avoid a storm, not because you want to live there forever. Meanwhile, the negative consequences of inflation and a falling dollar are real, and those negative consequences are another limit on their platinum credit cards.

              If the U.S. government goes like Greece, there isn’t anyone in the world big enough to bail us out–not even China. And when the world investment community decides that they can invest their money elsewhere safely and get better than the measly 0.66% they’re getting by sitting in U.S. ten year treasuries, they’ll pull their money out of U.S. denominated debt and park it somewhere else. That’s when things get out of control.

              I’d love to believe that Congress will do the prudent thing before that happens, but, again, the idea that the government will cut spending before they need to doesn’t have much support. If they’ll only cut spending when they have to, we need to do what we can to make them have to cut spending.

              1. I keep things real simple: love thy neighbor, plan for tomorrow but live for today, and never spend a dollar you ain’t got…

                Those kind of bedrock principles have served me well, and they’re the kind of things I expect from those who are given the reins of power.

          4. I have to agree with Overt on this one. CA is not a sovereign government, they don’t have the ability to borrow endlessly from the Federal Reserve. At some point CA can legitimately go bankrupt, the federal government cannot. It can inflate the dollar until its not worth the paper it’s printed on, but it can never “run out” of money, so there is little impetus to cut spending.

            Political climate is another difference, Republicans have almost no state-level power in CA, so Democrats have no one cast blame on. At the federal level both parties will let it all burn down and try to capitalize by blaming the other.

            Just look at the CoVid stimulus negotiations. Both sides agree on at least a trillion dollars worth of spending including extending the unemployment benefits, replenishing funds for the Paycheck Protection Program, and an additional per-person cash payment. But they won’t pass it. Why? Because both sides are getting more political mileage out of blaming the other for holding it up

            1. Gov. Newsom OKs budget closing $54.3 billion deficit

              Lefties were going on and on about Taxifornia’s budget surplus early 2020. Not anymore.

              Commifornia’s budget is $202.1 billion and mostly spares public schools and health care programs. 25% budget deficit…yup 1/4.

            2. Political climate is another difference, Republicans have almost no state-level power in CA, so Democrats have no one cast blame on.
              Democrats only have about a three-fourths majority. They can afford to lose less than a third of their party on votes. If it weren’t for the Republicans holding on to their remaining seats, the Democrats would have a safe margin to pass solutions the states problems.

          5. “be happy that Trump is buying votes to win”
            cutting off the funding source for grandma’s social security is an interesting way to buy votes from old people – the age group that tends to vote the most

            1. Grandma doesn’t care about the funding. She’s still getting benefits paid by the credit of her grandchildren.

        4. The government will never be so flush with cash that they decide to cut spending.

          I agree with this 100%

          Starving the beast is the only way that I see to resolve the debt crisis with today’s political climate. We’re heading for a crash, might as well hit the accelerator and get it over with. Either voters will decide to care, or the value of the dollar will correct for our own stupidity. Either outcome results in less government long-term.

        5. “They will only cut spending when they have no other choice. Depriving them of revenue gives them less and less choice but to cut spending.”

          Sorry Ken, but this not what happen the government just borrows more. That is because borrowing hides the cost. This is true for people and for government. Want to cut spending, tax at a level appropriate to the spending. People then understand the cost of the spending and you can talk about cuts.

      2. Social Security is Non-Discretionary Spending
        That just means it doesn’t require annual appropriations. Congress has discretion to change Social Security, which it has in the past.

    2. Absolutely the only thing I ever wanted out of SS since my first paycheck at age 16 was the freedom to get out of SS. Never wanted to be anyone else’s obligation. It’s no more than forcing every generation into indentured servitude to the prior generation at greater expense.

  3. I know that there are a lot of people here who justify what Trump is doing, and I get it. I do not prefer the Biden administration to the Trump administration.

    However if you are going to make the argument that Trump is somehow a conservative vanguard, or that he is somehow a break from the Bush administration, you are crazy. Crazy.

    Bush’s “Compassionate Conservatism” was just the camel’s nose in the tent for populism in the GOP. The budget no longer mattered, but rather giving rewards to the favored classes of Conservatives became the objective. Way back when National Review was pimping special tax incentives for having babies, I realized that the battle was lost- that the GOP had drank the koolaid of bread and circuses. In that context it is no surprise that Trump would come along.

    Trump is a lifelong democrat. All that has happened is that He stayed a nativist, while democrats became globalists in an attempt to out-maneuver the GOP. But he has adopted the same Bread and Circuses nonsense that Bush and Obama loved. And soon we will have to pay the bill. *shrug*

    1. “Compassionate conservatism” was center-right progressivism, not populism. Trump made a huge break from the Bush 41 Bush 43/McCain/Romney establishment wing.

      1. How? Bush told people that they could get medications for free, much like the dems. He told people they could get better schooling for free, much like the dems.

        All the people had to do was give up their absurd obsession with this whole “deficit” thing. Trump is in the same boat. Don’t worry about Payroll taxes- deficits don’t matter. Don’t worry about 25% of people out of work. We’ll give you checks, and Deficits don’t matter.

        The real break with the Bush/GOP legacy was the rejection of their Hawkism and Globalism. But as much as you like stopping endless wars (and I do!), or creating barriers to foreign competitors (I don’t), Trump has absolutely continued the same “Protect peeps no matter how costly the bread and circuses” mentality that Bush started.

        And before you get too sad about that point, just look at the Fuck You that Trump gave to all the landlords (like him) when the CDC declares its eviction moratorium. This is Trump’s livelihood, but to preserve his presidency, he is going to crush countless landlords. Not out of principle- but because it is the cynically best thing to do.

        1. Trump is forcing Congress’ hand.

          Congress is going to send veto-proof spending bills to Trump anyway. These bills tack on debt spending with no total cuts to government spending.

          Trump is trying a different approach. He is cutting source funding for Social Security and Medicare (OUR TWO BIGGEST FEDERAL EXPENDITURES) and force Congress to make cuts, raise taxes, and/or increase debt spending.

          Social Security revenue and spending is so automatic now that Congress tries to hide it from taxpayers. This forces a discussion about it.

        2. I think he’s been advised that the eviction moratorium will be ruled unconstitutional after the election.

    2. How do you account for his twisting every arm in the Senate to get a bill on his desk so he could cut $772 billion from Medicaid? It isn’t just that he’s willing to cut spending; it’s that he’s willing to cut socialist entitlement programs. We’ve never had a president like that before!

      Last week he killed a $1 trillion bailout of the states. The size of government will shrink because of that–if Trump is reelected.

      “In California, which had a $6 billion budget surplus in January that turned into a $54.3 billion deficit as a result of the pandemic, Gov. Gavin Newsom last week signed a fiscal 2021 budget balanced by massive cuts, including $2.8 billion in state worker salaries and $1.7 billion in state support for higher education. The budget also temporarily raises some state taxes, which is particularly painful in a recession.

      In New York, which Gov. Andrew Cuomo says is facing a $61 billion budget hole, the state has at least temporarily held back billions of dollars in aid to 12 cities that was approved in the state budget in April. That left those cities — which began their fiscal year on July 1 — with the task of cutting their spending by 20% to cover the shortfall in state aid.

      New York City alone faces a $9 billion budget hole as a result of the pandemic, with Mayor Bill de Blasio cutting $1 billion from the police budget and warning of as many as 22,000 municipal layoffs.

      Nationwide, state and local governments have shed nearly 1.5 million jobs from the start of the pandemic in March through June, according to the U.S. Bureau of Labor Statistics.

      https://www.cnbc.com/2020/07/07/states-in-fiscal-crisis-cuts-to-basic-services-loom-due-to-pandemic.html

      If they don’t get a bailout, California, Illinois, and New York may be forced to undergo in pension reform. Trump’s refusal to bail out the states may be the biggest blow for small government we see in our lifetimes–especially if he’s reelected. If Biden is elected, all bets are off.

      1. Just the fact that the MSM and unreason bitch about Trump so much gives credence to the fact that Trump is trying to cut government.

        Otherwise, the propagandists would be gushing over him.

    3. “However if you are going to make the argument that Trump is somehow a conservative vanguard, ”

      Who did that?

      1. The Lincoln Projects strawman.

  4. I earn 150$ in one week by working online.this job is very benificial easy and helpful for those who want a money in no time and for jobless persons, to get more info about this job check this website HERE? <a HERE? Read More

    1. $150 a week seems the like most realistic of these I’ve seen.

      1. It is 150$ not $150. That’s more than you can imagine.

        1. How many used Alfa Romeos will that buy?

  5. A pro taxation article on Reason? wtf

    1. Orange man bad.

      That and there are no Libertarians who write at this rag.

      1. Here at Teen Reason we realize that libertarian philosophy is unfashionable and dated.

        1. I have said for a long time that NPR was a Socialist propaganda outlet like MSM. They have not disappointed lately.

          1. A whole story about the National Socialists starving and killing Jews thru disease but the take away is how the Jews in the Ghetto overcame?

            So sad because the story should have been 6 million Jews kill 6 million Nazi scum.

            NEVER GIVE UP YOUR GUNS AND ALWAYS FIGHT TYRANNY.

        2. WTF.

          Not the historical example I’d use.

          And that’s even without twisting it like a grievance studies major and pointing out that they used a Jewish ghetto that no one survived as a good example of how to wipe out disease. Like OMG.

          1. One almost has to admire how the author contorted the facts for this (paraphrased passage):

            The Nazis concocted the idea that they had diseases, but, being the vermin they are, the Warsaw Jews ended up with disease (so they were right…?).

  6. Another reason that Trump is the best President in US History.

    He is forcing Congress to cut Social Security.

    Unlike most Commie politicians in the Democrat Party who spend more now and put that debt burden on future generations, Trump is cutting government taxation now to force Congress to admit they cannot debt spend forever.

    1. The pressure will be on Congress to “forgive” the unpaid payroll taxes in the future, much like DACA puts pressure on Congress to protect the dreamers from deportation.

      If the Supreme Court had struck down DACA, Congress wouldn’t have left them at the mercy of ICE. Nancy Pelosi would have passed a bill to protect them the next day, and Republican senators would have felt the pressure to protect them.

      That’s where we’ll be with Trump’s payroll tax deferral. The more those unpaid taxes stacked up, the more pressure there will be on Congress to forgive them.

      1. Yup. As I said above, Social Security and medicare spending is so automatic now that Congress can hide the two largest federal expenditures from taxpayers.

        This forces a discussion. The MSM has to talk about Social Security in a way that is uncomfortable for them.

        It’s fucking genius. Plus, Trump gets credit for people getting larger paychecks right before election time.

        It’s “n”th D chess. The Lefties don’t even see what’s coming.

  7. unless Congress decides to go ahead and forgive the tax

    That’s the plan. Of course this puts corporations in a bind – if they continue withholding taxes and the government forgives the debt, their employees are going to be pissed they didn’t get their “free” money, if they do discontinue the withholding and the government doesn’t forgive the debt, nobody’s going to save back this money and the feds are going to be coming to the corporations for that money.

    1. Congress will forgive the taxes. Which hits Social Security and medicare funding.

      It will also force some of the SJW companies who are trying to say that they dont think its right to not withhold the money, to cave and let their employees have more of their money.

    2. Most likely scenario: congress forbives the employee half of the taxes; requires the companies to pay the back taxes (with federal bailout money).

  8. I love that Trump is able to find ways to send MSM and their Lefty overlords screaming for the hills and foaming at the mouth.

    It will be glorious when trump gets reelected.

  9. Whether tax-cuts-without-spending-cuts are good or bad depends on what happens in the future.

    If the tax cuts “force their hand”, and make them cut spending in the future, that’s a good effect. (The “starve the beast” concept.)

    On the other hand, they can just borrow and print money. Even worse, if voters separate taxes from spending in their minds, they will tend to support big-spending politicians more, because they haven’t been trained to think “I’ll have to pay for it.” Government spending just happens magically. (If Bush had said, “I’m not going to invade Iraq until we create a pay-as-you-go war tax,” the Iraq War would never have happened.)

    It’s so easy for the federal government to borrow and print money, that the second effect is (unfortunately) much bigger than the first effect. History bears that out.

    1. “If it were done when ’tis done, then ’twere well it were done quickly.”

      Government ain’t gonna quit spending money until government collapses. We should be encouraging them to spend more money, the only way out is through. Let’s get this shit over and done with.

  10. It’s 2020 and a libertarian magazine is arguing against tax cuts and plumping the SS ponzi scheme.

    1. Do you have a link to that libertarian magazine?

  11. the largest share of their federal tax bill is the payroll tax, not the income tax.

    Employers pay a payroll tax. They have a payroll, which is taxed. Employees don’t have a payroll. They have an income, which is taxed. FICA is a payroll tax to employers and an income tax to employees.

    1. so the author should have said FICA tax in his sentence? Should the author just delete that sentence? How do you distinguish income taxes (the one with brackets) with OASDI or other taxes?

  12. Every old person that votes for Trump will regret it in just a few years, which is my kind of a joke.

    Honestly, Joe Biden should use this executive order to make this election a referendum on the future of social security. How Trump is able to straddle this fence is beyond me. 5 degree chess is my guess.

  13. Gordon, as i have stated elsewhere, i don’t understand why so many are still enamoured with modern football, perhaps you are to young to remember paying on the gate, terraces, an atmosphere that in some cases had the hairs on the back of your neck up, tinged with a bit of menace! Players who were paid well but still had roots in the community and clubs that while not perfect by any stretch still felt “owned” by the community HERE►Check my site.

  14. How about just get rid of the payroll tax permanently?

    1. I’d be in favor of that, but it creates a problem – since the gummint stole that money my whole life, and I am within a few years of retirement, I didn’t get to use that stolen money to help fund my own retirement.

      1. The Fed can just fund you directly…better than the primary dealers…

  15. I’m ALL IN FAVOR of limiting the slavery the government plantation dishes out on it’s people. If you’re gov-gun-forced (IRS) to pay tax the labor you did to earn that tax is your slavery sentence.

    Perhaps some things are deemed ((important enough)) to enslave citizens by threat of guns like nation defense to a small extent? Oh yeah; maybe that’s why the US Constitution LIMITS the power to tax to enumerated to-do things. I really don’t find any justification in enslaving 80yr-old men who insist on working to pay for fat-cat Tom’s RV trip at 65yrs old.

  16. The author buys into the myth of the “lock box”….its just an accounting convention. Yes SS and entitlements have to be paid right after the interest and it all comes from the general fund. SS is a non means tested welfare program for the elderly..that is all it is. As for the payroll tax..it makes no sense and just impacts jobs and salaries. The better way is to stop ALL deficit spending and pay for the govt with taxes only..yes that means massive tax increases but then the people will understand the true cost of govt. and we can finally have a discussion on radically downsizing the Federal Govt which is needed.

  17. What now, #LibertariansAgainstTaxCuts ?????

    A payroll tax cut is a great way to stimulate the economy, increasing take home pay for everyone who is working (if they haven’t already gone over the cap for the year.)

    And it does nothing to alter the Social Security funding picture, since all funds are commingled and all federal programs are completely underfunded and pay as you go.

  18. So the author is now favoring saving the socialist Ponzi scheme?

Please to post comments