Holiday Time

What if America's two most pressing economic concerns could be solved with one big idea?

Bill Drayton thinks Americans need a holiday.

But Ashoka's chair and founder isn't talking about Christmas, or even New Year's.  In an op-ed he wrote for the Huffington Post earlier this week, Drayton argued that it's about time congress passes a payroll tax holiday.  It’s a big idea, and one that’s supported by a compelling argument that Drayton has been refining for some time. After all, eliminating the payroll tax could, according to Drayton, kill two burdensome economic birds with one, efficient and innovative stone.

The first bird? Ballooning unemployment:

"Payroll taxation... kills jobs by inflating hiring costs over 15% and effectively subsidizing non-labor production factors - energy, materials, land -- by an equivalent amount. That's a whopping, perverse 30+% price signal giving business an incentive to be materials/energy/land/technology intensive but to avoid using labor."

The second bird? A ballooning budget deficit:

"Job creation and deficit reduction are inextricably linked. Higher employment increases the tax base and business profits so revenues go up, while expenditures on unemployment and other government dependency costs go down. Debt service also shrinks as a result…The cumulative budget effects are huge."

Read the full article here.

This article was originally published on 10 December 2010
Related TopicsBusiness & Social Enterprise, Employment

Author

As a student, he founded organizations ranging from Yale Legislative Services to Harvard’s Ashoka Table, an inter-disciplinary weekly forum in the social sciences. He launched Ashoka in 1981. He used the stipend received when elected a MacArthur Fellow in 1984 to devote himself fully to Ashoka. In 2005, he was selected one of America’s Best Leaders by US News & World Report and Harvard’s Center for Public Leadership. Other awards include the Yale Law School’s highest alumni honor, the National Wildlife Federation’s Conservation Achievement Award International; and the National Academy of Public Administration National Public Service Award. As one of three members of the Leadership Team, his special responsibilities are leadership of the new group entrepreneurship and social financial services programs as well as staff search and marketing functions.

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