Cutting payroll taxes may not do much to stimulate the economy, this expert warns.
That’s the mood in D.C. right now with respect to President Trump’s proposed payroll tax cut as being essential in securing another round of government stimulus for households battered by the COVID-19 pandemic.
While Trump views the payroll tax cut as a dealbreaker in any new fiscal stimulus, clearly something needs to be done to avoid a fiscal cliff that may wallop stocks and the U.S. economy. The extra $600 in unemployment insurance as part of the Coronavirus Aid, Relief, and Economic Security Act expires on July 31 for close to 30 million people. If it’s not renewed, consumer spending could quickly dry up.
Democrats in the House of Representatives led by Speaker Nancy Pelosi signed off on a $3 trillion COVID-19 relief bill several months ago. It would extend the $600 weekly payments originally passed in the Act through January. The bill would also provide for another round of direct payments of up to $1,200 for individuals and $6,000 with families that have children.
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