The National Federation of Independent Business (NFIB) has called on Congress to pass a six month payroll tax holiday as part of any economic stimulus package. This followed a call by the National Retail Federation (NRF) for a series of three sales tax holidays this year.
It also came on the heels of NFIB's release of its Small Business Economic Trends survey, which showed that small business owners are feeling the impact of the current economic slowdown. Only a net negative four percent of small business owners surveyed, said they planned to create new jobs, and 50 percent reported falling profits. The net percent of all owners reporting higher sales in the past three months fell to a net negative 25 percent, which according to an NFIB statement is the worst reading in the 35 year history of the survey.
"If Congress wants to jump-start this economy, they need to do something to help small business owners gain confidence that now is a good time to grow their businesses and create new jobs," said Dan Danner, NFIB's EVP. "Passing a six month payroll tax holiday would do just that, by putting more money in the hands of small business owners to invest in their business and by giving employees more of their own money to spend wherever they see fit."
Eliminating the payroll tax will have an immediate effect on employment. The suspension of the 6.2 percent payroll tax on employers will decrease the cost of labor and will help employers keep people working during this period of slowed economic growth, said the NFIB statement. A payroll tax holiday will also directly help lower and middle income taxpayers by increasing their paycheck by 6.2 percent, the statement continued. The percentage is the current OASDI (social security and disability insurance portion paid by workers).
"No other stimulus provision will be as immediate and as effective as the payroll tax holiday in getting money in the hands of both employers and employees who are struggling to make ends meet in the current economic crisis," said Danner. "The payroll tax holiday will help small business owners afford the high costs of labor and will increase economic activity by allowing workers to take home more of their own paychecks. As lawmakers work to craft a stimulus package, NFIB urges Congress to remember how important small businesses are to our nation's economy, and strongly recommends passing a six month payroll tax holiday as part of any economic stimulus package," Danner concluded.
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