Payroll Tax Cuts & Third Rails

Payroll Tax Cuts & Third Rails by Michael Sean Winters

My response:

The new third rail for Republican politicians is keeping capital gains and dividend taxes low, where they currently sit at 15%, rates they wish to make permanent. There would be some justification for doing that if there were also a Value Added Tax.

The current economic depression has taken the wind out of the sails for Social Security personal accounts, at least if they are invested in Wall Street index funds. There is an argument for investing them in your employer, provided that each employee gets the same number of shares, which would come from the employer.

As for the payroll tax holiday, what matters is not so much is that the stimulus come from this tax, but that it come from some tax. A better sweetener would be to let this tax expire and instead increase the child tax credit and make it refundable for everyone, since families are most likely to spend the money. Rick Santorum is currently the only candidate who proposes anything like this, as he would triple the child exemption - which in the political process may get turned into a higher child tax credit.