Tax Holidays, Unemployment Extensions, and Small-Biz Write-offs

Which of these ideas to aid recovery sounds best?

Payroll tax holidays:

To stimulate the economy now with no long-term increase in government debt, Congress could temporarily exempt a portion of wages from the Social Security taxes imposed on workers; those exempted wages would not be credited in computing that worker’s future retirement benefits. This way, the Keynesians would get their stimulus, and the deficit hawks could sleep better at night.

This would mean that a 40-year-old earning $50,000 and paying annual Social Security taxes of about $3,000 could see those taxes cut to about $2,000. The added $1,000 in his paycheck, along with similar amounts for other workers, could be a huge stimulus to the economy. Meanwhile, the later (post-retirement) cost of a temporary $1,000 tax cut would be spread over many years, meaning an annual pension reduction of only $100 or less.

Automatic Unemployment Benefit Extensions

In the 1970s, Congress worked on a system which had an automatic trigger built-in: whenever unemployment reached a certain point at a national or a state level, benefits were extended by 13 weeks.

The costs of these benefits were shared by the states, which paid them out of their regular unemployment insurance accounts, and the federal government, which increased taxes by about $8 per worker.

That trigger has ceased to exist, through a series of gradual alterations to the law. Reinstating it would ease the burden on states with high unemployment, and ease the anxiety of the unemployed Americans who now must wait and worry each time congress debates a new extensions.

Tax Write-offs

To get small businesses moving again, we should allow themto speed up the rate at which they can write off depreciating assets.Doing so would save employers money and spur entrepreneurialrisk-taking, without increasing the national debt.

-from the New York Times Opinion Page