Right now there is this talk of a payroll tax holiday. I generally support tax cuts to a point. But a payroll tax holiday has the potential to be super costly and have little impact on total employment. Then there is the full write off of equipment that Obama is proposing which, as a small business owner, would be nice but it’s not going to have a huge impact for the $50B a year it will cost.
I have a better idea. I’ll call it The Enloe Plan. It would either put people to work or not cost the government any money at all.
Here is how it works:
1. Only use the 7.65% employer portion of payroll taxes (Social Security and Medicare). Employees still pay their share.
2. When an employer hires someone who is currently on unemployment they take their portion of the payroll tax and use that to pay the new employees.
3. It is a dollar for dollar trade- if you don’t hire someone you pay your normal payroll taxes. Every dollar you pay a new hire you don’t have to pay in payroll taxers. Part time employees would also be eligible.
The math:
- Any company regardless of salary can hire one new full time person for “free” for every 13 people they have on payroll.
- If every private employer did this for all of their payroll taxes it would put 8.2 million people to work “overnight”.
- It would cost $100 Billion over four months if everyone participated. (everyone won’t so $100B would probably last a year…)
There you have it– no danger of tax cuts that go to overseas manufacturers or “hoping” that people get hired.
Here’s a page with the spreadsheet on it: The Enloe Plan
Questions? Comment or email berry (at) makingendsmeet -dot- org
References:
http://www.bls.gov/news.release/empsit.t08.htm