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White House Pondering Payroll Tax Cut Replacement



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The Washington Post is up with one of those vaguely sourced stories about the Obama administration considering replacements for the payroll tax cut set to expire at year’s end. The plan that seems to be floating around would involve refundable tax credits similar to the “Making Work Pay” credit that was part of The Stimulus.

The payroll tax cut is nothing to sneeze at, stimulus-wise — as much as $1,000 for the average family, distributed across every paycheck. While an income tax credit would work in roughly the same way, it might have different psychological effects. One of the amusing themes in The New New Deal, Michael Grunwald’s recent biography of The Stimulus, is then-chief of staff Rahm Emanuel freaking out about low voter awareness of the various tax cuts and credits in the package. The White House, to Rahm’s thinking, had missed an “Ed McMahon” opportunity to send people giant checks, a la Publisher’s Clearinghouse.



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