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Extending payroll tax holiday would provide big boost to North Carolina’s economy
Posted By Ed McLenaghan On December 19, 2011 @ 5:09 pm In Uncategorized | Comments Disabled
Amid the uncertainty  over whether Congress will agree to an extension of the payroll tax holiday, one thing is certain (or at least as certain as things get in economics): extending the payroll tax holiday for another year would provide a significant and much-needed boost  to the nation’s economy.
As we’ve written before , “the key to kick-starting an economy that’s currently stuck in neutral is to restore the buying power and confidence of American consumers, thereby ensuring businesses that they will continue to have a growing market for their goods and services.”
Failure to extend the current payroll tax holiday would cost the average North Carolina family almost $1,000 next year at a time when the economy’s prospects for a strong recovery appear slim . Economists estimate that extending the payroll tax cut next year could create between 400,000 to 1 million new jobs  across the country. That could translate into 12,000 to 30,000 jobs in North Carolina, if North Carolina’s economic benefits from the payroll tax holiday were to align with the state’s 3-percent share of the nation’s economy.
To put that in figure in perspective, North Carolina’s economy only added 12,000 total jobs  over the past year (from October 2010 to October 2011).
Although there is considerable evidence that direct spending and refundable tax credits  targeted to low-income and middle-class families provide more bang for the buck  for creating jobs, Congressional Republicans and some Democrats have resisted approving most of the direct-spending measures included in President Obama’s American Jobs Act . If tax cuts are among the only job-creation tools left capable of attracting bipartisan support, Congress would be well advised to act quickly on extending the payroll tax holiday for another year.
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URL to article: http://pulse.ncpolicywatch.org/2011/12/19/extending-payroll-tax-holiday-would-provide-big-boost-to-economy/
URLs in this post:
 uncertainty: http://research.upjohn.org/presentations/27/
 significant and much-needed boost: http://www.cbpp.org/cms/?fa=view&id=3572
 written before: http://pulse.ncpolicywatch.org/2011/09/22/proposed-employee-payroll-tax-holiday-would-provide-big-boost-to-nc%E2%80%99s-struggling-economy/
 slim: http://www2.goldmansachs.com/gsam/docs/fundsgeneral/general_education/economic_and_market_perspectives/wp_economic_outlook.pdf
 400,000 to 1 million new jobs: http://thinkprogress.org/economy/2011/12/19/391989/what-happens-payroll-tax-expire/
 only added 12,000 total jobs: http://www.ncesc1.com/pmi/rates/PressReleases/State/NR_Oct_2011_StRate_M.pdf
 refundable tax credits: http://ctj.org/taxjusticedigest/archive/2011/12/ctj_report_gops_tax_cuts_are_f.php
 more bang for the buck: http://www.americanprogress.org/issues/2011/09/recovery_act_spending.html
 American Jobs Act: http://pulse.ncpolicywatch.org/2011/09/14/north-carolina-the-american-jobs-act/
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