sleepless_on_wall_street

Obama's Role in the Market's Next Breakout

lorddarley - Your proposal to suspend payroll taxes for a year is an idea that should be evaluated. I think you are missing some zeros in the number you quoted, though. It should be 800+ Billion (not million).

The value of suspending the patroll tax rather than making a $500 per person tax credit is that it puts more money in the hands of those likely to spend it. Someone making $30,000 a year will see an after-tax income increase of almost $2,300. Such a person will spend at least some of that money, almost certainly way more than $500.

The employer also has a similar savings. For an employer of 50 such people, the extra capital available (before income tax) is $115,000. That is a significant amount for new business investment or adding a couple of more workers.

There are many possible formulas that could be evaluated, including making the tax holiday progressive (full holiday for those under a certain income, say $50,000, and phasing in higher tax levels up to the full 15.3% by some higher income, say $250,000).