IF THE POINT WAS TO STIMULATE SPENDING...:

Behind Bill Clinton’s Smile (Jonah Goldberg, 12/15/10, National Review)

[W]hat if Obama had gone another way? What if he had rejected both the Democratic and the Republican stimulus bills and gone for a one-year payroll-tax holiday of some kind, as many economists suggested at the time?

No bells, no whistles. No too-clever-by-half tax credits or subsidies. Just a straightforward suspension of some or all of the roughly $625 billion the government collects in payroll taxes. A 50 percent cut in the payroll tax, economist Lawrence B. Lindsey estimated during the stimulus debate, would have put $1,500 in the pocket of the typical worker making $50,000 a year. And it would have made hiring or keeping workers less expensive for employers.

After all, if you want more of something, tax it less. If you want less of something, tax it more.

Such a stimulus would have been very progressive because payroll taxes are decidedly regressive, hitting the working and middle classes harder than they hit the wealthy. According to American Enterprise Institute economist John Makin, payroll taxes amount to the primary taxes paid by the 60 percent of Americans who shell out comparatively little or nothing in federal income tax.

Ironically, this is exactly the argument the White House is making these days. As Clinton said Friday, “Every single unbiased economic study says the best thing you can do if you’re going to take a tax-cut path to grow the economy is to give payroll-tax relief.”

...then you'd have had to give that money back in the form of a debit card that expired on a set date.

Posted by Orrin Judd at December 15, 2010 6:27 AM