Debt Panel's Plan Proposes Payroll-Tax Holiday, National Sales Tax : It's All PoliticsA bipartisan plan for cutting federal debts and deficits includes a year long payroll tax holiday. It would proposes a new 6.5 percent national sales tax whose revenues would be used to reduce the national debt.
The Bipartisan Policy Center's web ad for its debt reduction plan.
Here are a few. It includes a one-year payroll tax holiday meant to act as an economic stimulus and job creator by giving employers and workers a temporary break from the taxes that fund Social Security and Medicare.
The idea is that revving up the economy through the tax holiday would drive up tax revenues and also reduce federal spending on automatic stabilizers like unemployment insurance, Medicaid and nutritional assistance.
It also includes a new 6.5 percent national sales tax whose revenues would be spent on lowering the national debt.
Like the president's fiscal responsibility panel, the Bipartisan Policy Center's plan would simplify the tax code and significantly lower tax rates across the board.
The plan released Wednesday would end the mortgage interest deduction.
That wouldn't happen until the housing market picked up significantly, however, according to former Clinton Administration Agriculture Secretary Dan Glickman and Vin Weber, a former Republican congressman, both of whom discussed the new plan on WAMU's Diane Rehm Show.
Similar to the earlier report, it would also raise the amount of income subject to Social Security taxes in order to provide more funding to stabilize that program.
The tax and spending ideas in this plan, like those in the draft plan from the president's panel that were aired last week, are obviously going to be controversial.
But they are meant to force a national debate the public seems ready to have, given how many voters say they are concerned about federal deficits and debt.