This is a stunning example of what payroll tax cuts can do. Even though the cut was minor--a 2% reduction--the effect was powerful. Personal income surged 1.0% in January and the biggest contributor...a huge drop in Contributions to Gov't Social Insurance (read: FICA, SS). This boosted personal income by $95 billion! Imagine if we had done a full payroll tax holiday as Warren Mosler and others (including me) have been suggesting? The economy would have been roaring!!!
Other important contributors
Private wages and salaries +$15 bln
Dividend income +$8 bln
Transfer payments (unemployment benefits, SS, health insurance, veterens benefits, etc) actully were down by $12 bln.
These payments are likely to be cut further in the coming months.
Problem is distributional effects. Given the income distribution in the US, how much will be spent and how much saved?
ReplyDeleteI am starting a business, and I would like to know how to get legal payroll for myself and employees! What do I have to do?
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