“An actual payroll tax holiday does mean an increase in take-home wages for some. According to recently published Internal Revenue Service (IRS) guidance on the president’s order, employers can temporarily stop withholding the employee’s 6.2 percent share of Social Security taxes for workers earning under $104,000 per year. That means more money in their paychecks for those eligible workers.
This could be significant. A little-known fact is that, for a majority of American taxpayers, the largest share of their federal tax bill is the payroll tax, not the income tax. In the way it’s designed, the payroll tax is regressive, so it hits lower-income earners harder. But a temporary reprieve is pretty much where the good news ends for the employees.
For one thing, as noted, the benefit may be short-lived. According to the IRS, unless Congress decides to go ahead and forgive the tax, it will eventually need to be collected by employers and sent to Uncle Sam. This is guaranteed to become a massive headache for employers, who will ultimately have to collect the deferred taxes from their employees. As a result, some large companies such as UPS have already announced that they will continue to collect the payroll tax from their employees and send the money to the federal government as usual.”
“as some point out, those tax deferrals will eventually become due, and employers may then have to withhold twice the amount of payroll taxes from employees’ paychecks starting in January.
This will create quite a bit of pressure on Congress to waive the deferred taxes next year. But even if that happens, somebody somewhere at some point will have to pay. There’s no such thing as a free tax holiday.”
“The 52-47 vote, which was intended to demonstrate Republican unity and support for the stimulus while putting pressure on Democrats, was only mildly successful in that aim, with 52 Republicans supporting the bill and Sen. Rand Paul voting against it. No Democratic senators, who’ve long pushed for a more expansive stimulus package, voted in favor of it. As a result, the bill was unable to meet the 60-vote threshold it needed to advance.
Republicans’ legislation contained roughly $650 billion in aid, according to the Wall Street Journal, including funding for school reopenings, the US Postal Service, and a weekly $300 supplement to unemployment insurance. Democrats’ more expansive HEROES Act, meanwhile, contained $3 trillion in aid including money for a $600 weekly unemployment supplement, another round of $1,200 stimulus payments, and support for state and local governments, in addition to funding for schools and USPS.
Since Thursday’s vote was a strategic maneuver aimed more at sending a message than producing actual policy, it wasn’t expected to pass to begin with. Instead, it was intended to give vulnerable Republican senators something to point toward as evidence they’ve backed more aid going into the election this fall.
The vote was also a way to get Democrats “on the record” opposing stimulus, according to Senate Majority Leader Mitch McConnell — a framing that could be used to cast blame in the coming months, though it ignores the fact that the Democrat-led House passed its own stimulus package months ago.”
“In 2019, about one in six children in America — 12 million kids nationwide — lived in poverty. That’s a rate about two or three times higher than in peer countries. And that was before the worst economic and public health crisis in modern history.
The scale of child poverty in America is a disgrace, not only because of the suffering it creates and the potential it drains from our society, but also because it’s easily avoidable. Child poverty is not an inevitability; it’s a policy choice. And we’ve been making the wrong choice for far too long.”
“An interesting lacuna to America’s mostly market-oriented economy is building houses. Most of the population lives in places where this activity is subject to a comprehensive regime of central planning, which states and which parcels of land can have houses built on them, what the minimum size of a parcel is, how many dwellings can be built on a given parcel (typically just one), how tall the building can be, how much yard space and parking there needs to be, etc.
Some of the regulation of house-building is about safety — electricity needs to be up to code and sewage needs to be able to be disposed in a responsible way. But most of it isn’t. There’s nothing unsafe about a 12-unit, four-floor apartment building — it’s just illegal to build one in most places. Building rows of houses that share exterior walls is a space-efficient and cost-effective means of creating single-family homes, but it’s illegal to build them in most places. Big, shiny condo towers only make sense in places where land is very expensive, but there are some parcels of very expensive land where it’s illegal to build them.
These rules profoundly shape the built environment in almost every American metropolitan area.”
“Biden is making relief for child care centers part of his larger caregiving plan, which he unveiled on Tuesday in New Castle, Delaware. “As a first step, Biden will immediately provide states, tribal, and local governments with the fiscal relief they need to keep workers employed and keep vital public services running, including direct care and child care services,” states the campaign document outlining the plan. (The campaign did not provide specifics on the among of relief the candidate would make available if elected.)
But the former vice president also promises to go beyond the immediate crisis and invest in child care for the future. His plan would provide free preschool to all 3- and 4-year-olds in the country. And for kids under the age of 3, the plan would create a system of tax credits and subsidies so that families earning less than 1.5 times the median income in their state would pay no more than 7 percent of their income for child care, with “the most-hard pressed working families” paying nothing.
The plan also includes tax credits to encourage employers to construct onsite child care facilities, something companies did during World War II that’s become harder to imagine today, as families (most often mothers) are expected to handle child care on their own.”
“Take, for example, the massive amount of additional debt the federal government has imposed on future generations of Americans during the COVID-19 crisis. That which is seen is the money flowing from the federal government to the unemployed, to those taking leave due to rescue money given to businesses during the pandemic. While we might be aware in the abstract that there is an accompanying rise in U.S. government indebtedness, that which is not seen is the increase in taxes that must be paid by future generations. Nor do we see the slower economic growth that will be caused by the need to pay off this debt.
Even less obvious are the unseen effects of making permanent the supposedly temporary creation of federal paid-leave entitlements. While it’s easy to point to all the advantages of such a move for the 35 percent of women who didn’t have any such benefits pre-COVID-19, it’s more difficult to see the lower wages and employment that will result. Also hidden from our vision is the increase in employment discrimination fueled by this policy: When governments arbitrarily increase employers’ costs to hire certain groups, fewer members of those groups get hired. The academic literature is clear that such legislation inflicts very real negative effects on women.
Also harder to spot are the unseen effects of rent-control legislation. Such regulations exist in states and cities nationwide, though it wouldn’t be surprising to see more such policies implemented in this crisis’s wake. The benefits are easy to see. The rules promise to make housing in high-value rent markets more affordable for middle- and lower-class families. But once such legislation is implemented, reality kicks in.
We see rents going up more slowly than they likely would have otherwise. When paired with eviction protections, this policy gives an illusion of control to tenants who were already in rental homes when the regulation was adopted. What is unseen, however, is significant. Rent-control statutes reduce the incentives for property owners to supply their facilities as residential housing, and they make it less attractive for developers to build rental housing. Rent control even diminishes landlords’ willingness to maintain the quality of their units. The final result is less and lower-quality housing for ordinary people.”
“According to the U.S. Bureau of Labor Statistics and McKinsey & Co., 70–80 percent of independent contractors prefer contract work to a traditional job and do not feel financially strapped. I fall into that category—but the crusaders behind laws such as A.B. 5 treat people like me as if we are invisible. Here in New Jersey, a July 2019 report from Gov. Phil Murphy’s Task Force on Misclassification was written by a group that included no independent contractors and drew on work by the National Employment Law Project, a think tank funded by the AFL-CIO and other unions. The report acknowledged that misclassification of workers as independent contractors was most prevalent in low-wage, labor-intensive sectors such as janitorial services. But the policy changes it recommended applied to independent contractors across the board.”
“The Coronavirus Aid, Relief, and Economic Stability Act, or CARES Act, signed into law by President Trump in March, was an unprecedented act of fiscal policy by the US government. It entailed measures that would have once seemed unthinkable, including an extra $600 in unemployment benefits, $1,200 stimulus checks to most Americans, and billions of dollars in forgivable loans to small businesses. As Vox’s Dylan Matthews recently laid out, the Covid-19 response was larger than the stimulus policies put in place in response to the Great Recession and, from a fiscal standpoint, bigger than the New Deal.
It made a difference. Personal incomes actually went up in April thanks in large part to unemployment insurance and stimulus checks. Poverty rates didn’t increase.”
“The stimulus bill had with it an underlying assumption that the economy would improve by the summer, and that was predicated on the country getting its outbreak under control. But the country didn’t — a series of public policy and leadership failures at the federal, state, and local levels have allowed the virus to thrive.”