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AFL-CIO, Other Groups Urge Congress Against Payroll Tax Cut

By Joshua Rosenberg · 2020-03-11 19:16:43 -0400

Groups including the AFL-CIO and tax policy organizations requested Wednesday that lawmakers avoid enacting a payroll tax cut, which President Donald Trump recently floated as a way to counter economic fallout related to the coronavirus outbreak. 

Thirteen groups, which also included the Institute on Taxation and Economic Policy, argued in a letter that lawmakers had more effective tools at their disposal for addressing economic concerns associated with coronavirus, also known as COVID-19.

Payroll tax cuts "would provide little immediate stimulus to the economy because they would be relatively inefficient and paid out in small increments over time," the letter said.

"Moreover, payroll tax cuts provide the largest weekly payout to those who least need them and are least likely to spend them," the letter said.

Instead of pursuing a payroll tax cut, lawmakers should advance proposals that would more directly inject cash into the economy, the letter said.

"Several economists have recently proposed ways for the federal government to make cash payments to households, which is likely to be more effective than tax cuts," the letter said.

It cited a proposal to provide $1,000 to every American adult, which was advanced by Jason Furman of Harvard University, who served as the chairman of the Council of Economic Advisers under President Barack Obama.

"This would ease the strain on family finances from coronavirus-related layoffs and cutbacks while cushioning the economy against a collapse of consumer demand," the letter said.

On Tuesday, Trump told reporters that he had discussed with Senate Republicans the idea of enacting a payroll tax cut.

But Democrats were quick to criticize the proposal, with House Ways and Means Committee Chairman Richard Neal, D-Mass., telling reporters Tuesday that a payroll tax cut is "off the table" as House Speaker Nancy Pelosi, D-Calif., and others work with the Trump administration to craft a stimulus package. 

House Majority Leader Steny Hoyer, D-Md., characterized the proposal as one that would disproportionately benefit the country's wealthiest individuals while doing little for low-income earners and nothing at all for jobless Americans. 

The House Ways and Means Committee's ranking member, Rep. Kevin Brady, R-Texas, told reporters Wednesday that discussions between Trump and Republican lawmakers regarding a payroll tax cut should remain "ongoing."

--Editing by Neil Cohen


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