White House Calls for Payroll Tax Cut as Balm to Soothe Virus Impact

By:
Chris Gaetano
Published Date:
Mar 10, 2020
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With markets volatile at best and plunging at worst, the White House has called for a payroll tax cut to help stimulate the economy and assist workers whose jobs have been affected by the coronavirus epidemic, according to MarketWatch. While the specifics as to the size of the cut have yet to be revealed, the president said several times that it should be "substantial." 

Democrats, in response, said that they were not against a payroll tax cut in principle but that the administration's proposal was not sufficient, as they believed it did not address the core problem of the virus itself; they are currently working on a bill of their own which includes affordable testing, unemployment benefits, and paid leave for working families affected by the outbreak. While a formal vote could come as soon as this week, MarketWatch said it is more likely to take place sometime in April. 

Whatever is passed, it would go on top of the $8.3 billion spending package to combat the coronavirus, which was signed into law last week. The spending package, among other things, allocates $3 billion for developing treatments for the virus, $2.2 billion for the Centers for Disease Control and Prevention, $1 billion to support overseas efforts, $20 million to administer small business loans, and $300 million for the government to purchase the vaccine (once it becomes available) and other therapeutics and make them available to the public. Legislators quoted in the Journal suggested that, as the epidemic continues, more spending bills could be in the future.

An earlier article in Bloomberg noted that the global economy seems to be experiencing both a supply shock and a demand shock: On the one side, as workers stay home and workplaces close down, the ability to produce the materials other companies need to create their products has weakened. At the same time, as people become increasingly wary of public places, they're more reluctant to shop, eat out, and or travel. These twin shocks, according to Bloomberg, are leading to the weakest economic expansion since 2009. 

New York City has responded to the economic crisis by offering interest-free loans and grants to small businesses affected by the epidemic, according to Politico. NYC businesses with fewer than 100 employees, can receive interest-free loans of up to $75,000, provided they can document a drop in sales of up to 25 percent due to the epidemic. Small businesses with fewer than five employees can apply for a direct cash grant of up to $6,000 in payroll costs. 

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