A Strange Preference on Wage Subsidies
By Arnold Kling
Mark Thoma says that he signed a petition, which reads in part,
There are many ways to design an effective hiring tax credit, but in general the beneficial effects will be greater the stronger the hiring incentives and the lower the administrative burdens placed on firms. It is critical that such a tax credit be put into place quickly and that it is publicized widely. Firms will begin to accelerate hiring only when know they can count on such tax relief.
Cutting the employer portion of the payroll tax would do exactly what this petition wants. You could hardly ask for a lower administrative burden, a faster rollout, or a more direct wage subsidy. Yet my guess is that none of these economists would sign a petition calling for cutting the employer portion of the payroll tax. It really is the case of preferring the wage subsidy to take the form of a spending increase rather than a tax cut.