A good idea would be to make a payroll-tax holiday the first step in an orderly transition to

scrapping the payroll tax altogether and replacing the lost revenue with a package of levies on
things that, unlike jobs, we want less rather than more ofthings like pollution, carbon emissions,
oil imports, inefficient use of energy and natural resources, and excessive consumption. The net
tax burden on the economy would be unchanged, but the shift in relative price signals would
nudge investment from resource-intensive enterprises toward labor-intensive ones. This wouldnt
be just a tax adjustment. It would be an environmental program, an anti-global-warming program,
a youth-employment (and anti-crime) program, and an energy programGet America Working! has been
quietly pushing this combination for twenty years. In one form or another, without much fanfare, it has earned the
backing of such diverse characters as Al Gore and T. Boone Pickens, the liberal economist James Galbraith and the
conservative economist Irwin Stelzer, Republican heavies like C. Boyden Gray and Democratic heavies like Robert
Reich. Its ambitious, it jumbles ideological and partisan preconceptions, and it represents the kind of change that
great crises open political space for.
-- New Yorker senior editor Hendrik Hertzberg
The Get America Working! approach would work, in effect, by correcting a major price
distortion. The current U.S. Internal Revenue Code taxes employment far more heavily
than it does the use of natural resources. This distortion has grown progressively worse
as payroll taxes have grown. Revising this distortion would increase employment, equity
and overall economic vigor importantly. And it would do so by responding to market
price signals, not through clumsy and expensive government interventions.
-- Richard Zeckhauser, Harvard economist and a member
of the Council of Economic Advisors to the American Enterprise Institute
We should cut payroll taxes deeply and permanently, both for employers and employees. Extending current
cuts for workers now is a necessary first step. But we should also deepen them, adding cuts to employer
payroll taxes to stimulate jobs, and phasing in new taxes on sources other than labor that can permanently
replace payroll tax revenues. Giving cuts to employers and making them permanent would provide the
certainty businesses need to get off the sidelines and hire. Of course, the big question is, which revenues
could both parties agree on to offset the payroll tax? A study by the bipartisan group Get America Working!
identified 25 revenue sources that could offset payroll tax cuts. A permanent cut in the payroll tax, offset by
new sources of revenue, would be a first step to fundamental tax reform. As unemployment and economic uncertainty drag
on, and the consequences close in, its time we took it.
-- Eugene A. Ludwig, chief executive of the Promontory Financial Group and
former Comptroller of the US Currency under President Bill Clinton
Ask any economist or businessperson what kind of tax cut would be the biggest boost
to job creation and the answer is clear: a cut in payroll taxes, because it would directly
reduce the cost of employment. Ask any social justice champion which tax is the unfairest
tax of all and the answer is clear: the payroll tax, because on the employee side it is 6.3
percent of wages up to a cap of $106,800, thus taking a bigger bite, proportionally, out of
a dishwashers paycheck than a CEOs.
-- Gregory Mankiw, Harvard economics professor and former chair
of the Council of Economic Advisers under President George W. Bush

PERSPECTIVES on Get America Working!s Big Idea

More than almost any feature of the American tax code, the payroll tax deserves to be pared away into
extinctionSo there is only one question conservatives should be asking about the payroll tax holiday:
How do we make it permanent?
The payroll now imposes an unnecessary burden on a stagnating economy. In an era of mass unemployment,
mediocre wage growth and weak mobility from the bottom of the income ladder, it makes no sense to
finance our retirement system with a tax that falls directly on wages and hiring and imposes particular
burdens on small business and the working class.
-- Ross Douthat writing in two recent New York Times columns
EVERY dollar raised by taxing harmful activities is one dollar less that we must raise by taxing
useful ones. The resulting revenue would enable us to reduce not only the federal deficit, but also
the highly regressive payroll tax. And cutting that tax would stimulate hiring and help low-income
families meet the burden of new taxes on harmful activities.
-- Robert Frank, Cornell University economics professor
80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income
people would get most of the benefit, [money from cutting payroll taxes] is likely to be spent. [Cuts] would
also give employers an extra incentive to hire because theyd save on their share of the payroll tax. And
most of the incentive would be directed toward hiring lower-income workers who have taken the biggest
hit on jobs and pay during the recession.
-- Robert Reich, UC Berkeley economics professor, former Secretary of Labor
A revenue-neutral oil security tax would take every penny collected at the pump and put it right
back into the pockets of consumers. Options for doing so include cutting the payroll tax, which
disproportionately affects the lowest-paid employees.
-- Senator Richard Lugar
We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes
on the things we want more of (income and jobs).It is essential that any taxes on carbon
emissions be accompanied by equal, pro-growth tax cuts. A carbon tax that isnt accompanied
by a reduction in other taxes is a nonstarter.The good news is that both Democrats and
Republicans could support a carbon tax offset by a payroll or income tax cut.
-- From an oped by former South Carolina Congressman Bob Inglis,
director of the Energy and Enterprise Initiative, and economist Arthur Laffer,
member of President Ronald Reagans Economic Policy Advisory Board
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