By Teresa Welsh |
Extending and expanding the payroll tax cut will directly help working families while boosting our economy overall. Across the country, the typical family will receive a tax break of about $1,550. That's money they need to make ends meet, which in turn will help drive economic growth.
Our economy remains in a fragile recovery. For many workers and their families, too often it still doesn't feel like a recovery at all. Family income fell from 2009 to 2010—the most recent data we have—and incomes remain 6.4 percent below the most recent peak in 2007. As of last month, 14 million people remained out of work. Another 160 million workers face the prospect of coping without that anticipated tax benefit of $1,550. Families need a break.
Like other policies in the American Jobs Act, including unemployment benefits for the long-term unemployed, infrastructure investments, and funds to help keep teachers in schools and cops on the beat in face of brutal budget crunches, the payroll tax cut will help keep money flowing through our economy. As families spend the extra money in their pockets, their local grocery and retailers will see more customers, which will spur firms to ramp up investment and hiring to meet demand and put our economy back on track.
Conservatives are poised to vote down a 2012 payroll tax cut—even as they argue that the wealthiest deserve a break and economic conditions remain tough for workers. That is not sound economic policy. We should target scarce resources toward the 160 million workers and their families who would benefit from a payroll tax cut as well as the 14 million workers unemployed through no fault of their own. That delivers the biggest bang for the buck. That means focusing on the 99 percent, not those at the very top.
Extending and expanding the payroll tax cut is the right thing to do alongside ensuring that the long-term unemployed have access to benefits and making sure that we are making investments to put our economy back on track. These kinds of policies will move us toward getting America back to work.
About Heather Boushey Senior Economist at the Center for American Progress