Stop Me Before I Vote Again

I know this question hasn't much to do with this post, but why in the world did anyone think that lowering the payroll tax on the employee side would spur employment? It seems like such a ridiculous idea that it only could have been a result of some sort of mix up in paperwork. I'm guessing the thinking was that the extra money in the pockets of employees would be put back in the economy or something, I don't know. But since the measure was specifically about job creation, it seems that this idea is the equivalent of waiting for the sidewalk to get hot enough to cook an egg rather than just cooking it on the stove. If you really want people to get hired, make it easier for those doing the hiring to hire people! IT'S RIGHT THERE IN FRONT OF YOUR FACE! What an amazing display of cognitive dissonance, or, as the French say, utter stupidity.

I know this question hasn't much to do with this post, but why in the world did anyone think that lowering the payroll tax on the employee side would spur employment? It seems like such a ridiculous idea that it only could have been a result of some sort of mix up in paperwork. I'm guessing the thinking was that the extra money in the pockets of employees would be put back in the economy or something, I don't know. But since the measure was specifically about job creation, it seems that this idea is the equivalent of waiting for the sidewalk to get hot enough to cook an egg rather than just cooking it on the stove. If you really want people to get hired, make it easier for those doing the hiring to hire people! IT'S RIGHT THERE IN FRONT OF YOUR FACE! What an amazing display of cognitive dissonance, or, as the French say, utter stupidity.

Paul, job class tax cuts translate immediately into increased demand and lower level of private debt. Demand determines hiring. Debt determines the strength and endurance of demand. Owen wants to pump immediate cash into the hot little hands of people who are living paycheck to paycheck.

I wasn't really talking about Owen, I was talking about the 2% payroll tax cut for employees that was implemented for this year. I'm an employee, and I'm getting the tax break, but it's a minimal blip. I may buy an extra latte every couple weeks. I understand that you aren't talking about 2%, you are talking about a more substantial tax cut. That may be right in the long run, but I also see no problem with just junking employer side payroll taxes, at least temporarily, to make it easier for smaller potential employers to hire people. I feel over my head already in this conversation, so please feel free to set me straight.

I misread your comment. You're right about the inutility of the picayune tax cut. 2% is a plantation master's largesse. The employer-side cut takes things in different waters. That cut by itself won't increase hiring. Demand is just about everything where hiring is concerned. Taxes could go up without affecting hiring, provided demand did too.

Sailing onwards, some lefties would junk payroll taxes altogether, employee and employer both, and pay the benefits out of general revenues.

I think your last suggestion makes a lot of sense. And I don't think that cutting the payroll tax will cause a lot of employers to start hiring, but I do think that keeping it in place creates a hurdle that keeps a lot of smaller employers from hiring people. Who wants to hire someone and then get taxed for what you pay them? I don't have a problem with raising taxes, I just think there are better things to be taxed.

the above exchange is why this site sorely needs more ELECTRIC AL
and less sponge paine

".. the inutility of the picayune tax cut. 2% is a plantation master's largesse. The employer-side cut takes things in different waters. That cut by itself won't increase hiring"

"Demand is just about everything
where hiring is concerned" !!!!!!!!!!!!!!!!!!!!!!!!!!!

p a in the end
both sides of the payroll tax
come straight out of wages like all benefits
its just part of the cost of labor regardless of who pays

yes in a sudden cut mode the cash flow goes
in two different direction
but with time the 3aves of demand and supply leave all the drift wood on the employee side of the lake

in fact the employer side bit
over time
becomes a duck blind
i'd prefer it all got seen
coming out of pay

double the trouble

show the jobbler geefs
the whole shit slide

as to small bizz
lets target them directly
by a generous small bizz loan window

why bother to throw money at the corporates sitting on two trillion in cash ??

of course we will if barry tries
another december 10 like great class compremise

see http://counterpunch.com/whitney06092011.html
by my pen pal
M Slappington Whitney III
of the tar throwing whitneys

the small biz types nedd start up and sustainer cash

that smells like a easy loan and credit line op to me

as i used to call it a great oklahoma loan rush

I have something in common with George the Lesser, aka Baby Doc Bush. Like him, I understand small business growth. I was one... once. The petit bourgeois partnership schemes are similar enough to the regular feudal type businesses in some fundamentals. You crunch the numbers, extrapolate conservatively and if adding another partner will increase revenue by twice what she/he expects as a share, then it makes sense to expand the enterprise's labor capacity.

Sweetheart access to start up and sustainer cash would be a winner, I reckon.

I guess my point was that the payroll tax cut was such a pittance, and it seemed so short term and focused on one thing and one thing only, that the method they chose could not have been more circuitous. Employees do not generally hire themselves. In the long term, macro sense you two are recommending I'm an agnostic and incapable of thinking that far out. Maybe some day.

Paul, your point about the circuitousness is entirely correct. The move makes little sense, even on their terms, and it makes even less sense when we take the one-sided half-assedness of it into account. It's like a cheapskate, insulting tip in a restaurant, with a haughty sniff for the maitre d'.

I like that imagery. My tip usually is ONLY the haughty sniff.

not exactly 'the two different directions' you refer to owen but, at least on a relative basis, quite substantial spending
divergence has been underway:

Since the recovery began, businesses’ spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent, according to the Commerce Department. A capital rebound that sharp and a labor rebound that slow have been recorded only once before — after the 1982 recession.

http://www.nytimes.com/2011/06/10/business/10capital.html?_r=1&ref=todayspaper

the words 'composition of capital'
keep buzzing around in my not
yet perfectly addled brain.

I'm venturing into waters above my depth here, but I suspect that 26% on "equipment and software" doesn't quite correspond to net "capital investment". There are a lot of rents built into that 26%. Think of pirate ships attacking each other.

And I 'suspect' you are absolutely right about rent - a global credit bubble can have that effect.
Different angle, I've been looking at the OECD's Structural Analysis [STAN] Database for the u.s. and unless gross fixed cap formation had a miraculous 2010, it doesn't seem to conform with the NYT's article.