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Payroll-Tax Cut Would Not Boost Jobs, But Extending The Payroll Tax Cut Would Boost The Economy

A proposal to cut payroll taxes in an attempt to help increase hiring has drawn criticism from some economists and business owners, but it is likely one of the few stimulus proposals that could pass a sharply divided Congress.

If Congress wanted to make a difference, an extension of the two-percentage point reduction in Social Security payroll taxes paid by employees would go a long way helping to avoid a recession in early 2012.  Cutting payroll taxes for employers would not spur any new hiring, but putting more money into consumer’s hands would help avoid a slowdown in growth in the first quarter of next year.