Payroll Tax Cuts For Coronavirus Offer Little Boost, Groups Say

Congress should avoid payroll tax cuts and measures aimed at wealthy Americans as part of a stimulus package to treat an economy suffering from the new coronavirus, 60 groups told the House and Senate in a letter Tuesday.

More immediate incentives designed to help the lower and middle classes such as direct cash payments and increased federal aid to states will have greater impact, according the groups, including Americans for Tax Fairness, the Tax Justice Network and the Institute on Taxation and Economic Policy.

"We write to urge an aggressive response to the economic and societal impact of the novel coronavirus outbreak, but caution against allowing this national emergency to be used to demand tax cuts that will be poorly targeted, lack the biggest bang-for-the-buck and favor those families that have the most resources to weather the crisis," the groups said.

Payroll tax cuts are paid in small increments and don't go to the unemployed, the organizations said. The largest payments go to higher-income Americans who least need them and are least likely to spend them, they said.  

Instead, legislation should focus on directly helping Americans most deeply and immediately affected by the outbreak, the coalition said. Congress should start with families with members diagnosed with COVID-19, health care and child care workers, employees without paid sick leave and low-income students who will lose school lunches when their classes shut down, they said.

State and local governments dealing on the front lines of the epidemic would also benefit from increased aid for public health spending and unemployment programs, they added.

--Editing by Tim Ruel.

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