WSJ Response: Congress Returns To Battle on Taxes

With 2012 underway, congressional leaders are already in the midst of a debate on how to handle the payroll tax. Though the tax is widely considered popular among both Republicans and Democrats, the Democratic controlled congress are both holding strong and not appearing to back down. Though an election year is usually a time in which the productivity of both houses of congress is at an all time low, Bush-era tax cuts are set to expire in 2013, creating an atmosphere that congressional speculators believe is a do-or-die situation. While much debate on the payroll tax has already taken place, a last minute decision in a lame duck session of congress is likely due to the political ramifications of President Obama’s constant clash with congressional republicans, who currently control the House of Representatives. To make matters more complicated, most analysts agree that Republicans have a good chance at taking control of the Senate this year, further increasing the divide between Republicans and Democrats.

Though complicated, I believe that the payroll tax should remain at 4.2% rather than 6.2%. This lower payroll tax rate allows for small businesses to further expand, thus lowering the unemployment rate and getting the market moving again. As the United States moves out of the worst depression since the Great Depression, fiscal and monetary policy should be tied to the conservative school of thought, as it is the best way to get the national economy moving again. With payroll taxes impacting every business nationwide, increasing the already high burden on businesses will further stall the economy and increase unemployment. Though politics will play a large role in whether or not the economy gets moving again, this is a good first step in ensuring the financial stability of the United States in the long