9/02/2010

And So The Vote Buying Begins....

According to the WaPo via the ever-watchful Corner, the Obama Administration will begin to attempt to buy off American voters before the upcoming election.
Obama Administration Considering Payroll Tax Holiday
September 2, 2010 5:31 P.M.
By Daniel Foster

The White House economic team is reportedly considering pushing for a second stimulus comprised of “tax breaks” for businesses — including a possible $300 billion payroll tax holiday, and a $100 billion extension of an R&D tax credit.

The Washington Post reports:

"The staff-level discussions are in preliminary stages. But with the unemployment rate expected to rise again in new jobs numbers due out Friday, such a move could serve both to spur hiring and to combat Republican charges that Obama’s tax policies would hurt small businesses.

More spending on infrastructure – particularly transportation projects – is also under discussion, sources said. But a person familiar with the talks said it would be easier for a package consisting purely of tax cuts to “avoid the stain of a ‘bailout’ or ‘stimulus’ label.”

The proposals could be rolled out as early as next week.
That sounds great if you ask me and my paycheck, but it won't change my vote. And I am betting it won't change a whole lot of other votes as well. In fact I would venture to say that it could drive more voters away, as those who are on the fence may well see it for the attempted bribe that it is.

Additionally, the WaPo offers some extremely flawed analysis by saying "such a move could serve...to spur hiring..." Really? They think that a temporary tax holiday will cause employers to hire permanent employees?? Once the holiday is over, they would have to start paying the taxes again, one of the reasons that they wouldn't have hired those people in the first place.

Tax holidays are good at spurring one-time transactions (purchasing school clothes, TVs, clunkers, etc), but will probably have limited effect on recurring transactions (e.g. payrolls).

Much like 'Cash for Clunkers' and 'First Time Homebuyers' tax credits before it, this proposed temporary tax holiday will most likely have temporary effect...and a bad aftertaste when it is all over.


But then again, this proposal isn't about improving the economy, it is about sustaining the Democratic Party...

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