"The Get America Working! approach would work, in effect, by correcting a major price distortion. The current U.S. Internal Revenue Code taxes employment far more heavily than it does the use of natural resources. This distortion has grown progressively worse as payroll taxes have grown. Revising this distortion would increase employment, equity and overall economic vigor importantly. And it would do so by responding to market price signals, not through clumsy and expensive government interventions."
The Regressive Tax That Does the Work
Date:
Wed, 07/22/2009
Source:
New York Times/Economix
In this New York Times Economix blog entry, University of Chicago Economist Casey B. Mulligan notes the recent "rapid growth of the payroll tax (which includes Social Security and Medicare taxes) relative to the individual income tax ..." Noting the regressivity of the payroll tax, he suggests it be cut to restore the earlier proportions of these two main sources of tax revenues to the federal government.
