WASHINGTON, D.C. – The U.S. Congress Joint Economic Committee (JEC), Chaired by Senator Bob Casey (D-PA), today released a report detailing the negative consequences for American workers and businesses if Congress fails to extend the payroll tax credit. The report entitled, “Supporting the Engines of Economic Growth: Payroll Tax Relief Supports Economic Recovery,” shows that economic growth would be severely hampered if the employee payroll tax cuts expire at the end of this year.
Additionally, the report looks at the benefits to the economy of employer tax cuts and credits that reduce the cost of hiring and retaining workers.
“Increasing taxes on American individuals would cause an added strain on already tight budgets,” Said Chairman Casey. “This would in turn dampen consumer demand, causing contraction in the labor markets. More jobs would be at risk if we fail to extend these vital cuts."
Sluggish economic growth has negatively impacted job creation and household incomes. Economic data suggests that the reduction of payroll taxes of two percentage points in 2011 provided a cushion for households and businesses that would have felt an even further strain. The tax credit provides an immediate increase in worker’s take home pay. Middle and lower-income workers benefit the most from this tax credit and they are most likely to spend the additional money and put it back in to the economy.
Businesses would also benefit from a reduction in payroll tax rates, as they would be able to hire workers at lower costs. Incentives tied to increases in businesses’ overall payroll can encourage them to hire employees, add worker hours and increase salaries, the report finds.
Added Chairman Casey, “Providing incentives for businesses to hire would allow companies flexibility to manage their workforce and help alleviate some of the financial strain seen in recent years. This package of tax cuts for employees and small businesses will help to create jobs and strengthen the economy.
Chairman Casey continued, “With a stubbornly high unemployment rate, Congress must focus on providing immediate relief to workers and businesses. This payroll tax credit would directly impact the unemployment situation and provide a much needed boost to our still fragile economy.”
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