[US] A Payroll Tax Holiday Could Help Get People Back To Work


 
29 JUL 2020

The US responded swiftly and effectively to the COVID-19 crisis and the ensuing economic collapse, an impressive feat when contrasted with its reaction to the smaller scale global financial crisis of 2008. Provisions in the Cares Act and other support measures put into place were created in the assumption that the economic impact would be severe but of short duration. Policy support was meant to be a temporary measure to help things return to normal. 

However, the end is not yet in sight. Lay-offs are increasing and many small businesses are in danger of failing so further fiscal help is needed. A new stimulus round brings with it the chance to rethink employment incentives and help more people return to work. Demand ought to rise as the economy reopens, increasing the need for workers to come back to businesses. Policies are required that continue to help workers suffering reduced hours, wages or both but also encourage other workers to return to the labour force. Financial Times looks at the benefits of a payroll tax holiday.