The Payroll Tax Holiday: Relief for Small Business

Last week, I unveiled my seven point Roadmap to Economic Recovery, a series of concrete proposals that I believe will help get our economy back on track and create jobs. As I’ve said before, none of these policies is a “silver bullet” that will magically cure all of our nation’s economic ills, but by implementing these common-sense measures we can create conditions conducive to investment and job creation.

As I’ve travelled across the 7^th District, I’ve toured numerous small businesses and many of them are on the brink of closing due to a dramatic decrease in demand for their products and services. Many of them have had to lay off employees because the cost of keeping them on was too high.

That’s why I’ve proposed a temporary six-month moratorium on payroll taxes. Consumer spending represents 70% of our gross domestic product, and a payroll tax holiday will put money back into the pockets of average consumers and increases the discretionary income available to them to spend on the products and services small businesses provide.

A payroll tax holiday will also lower the cost of labor for small businesses, making it cheaper for them to hire additional employees and create jobs. The payroll tax has to be paid by a business regardless of whether the business is profitable, and this holiday will alleviate that burden as a business tries to climb back to profitability. The increased revenues that will come as a result of higher consumer spending and the lower cost of paying their employees will help bring struggling small businesses back from the brink.

For too long, government has been in the business of picking winners and losers. Washington has bailed out big banks, auto companies, Fannie Mae and Freddie Mac have but average, everyday small businesses that don’t have big-money lobbyists are left to fend for themselves.

Small businesses have created 70% of the net new jobs in the last decade, and only when small businesses begin to hire again will we truly begin to emerge from the recession. A payroll tax holiday like the one I’ve proposed will give families much needed tax relief and help small businesses survive and prosper in this challenging economic environment.