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Opinion of the Day: 0% payroll tax doesn’t help if you’re not on the payroll

Well, it’s official.

As of March 11, 2020, the World Health Organization has declared the spread of COVID-19 to be a global pandemic. WHO director-general Dr. Tedros Adhanom Ghebreyesus has stressed the severity of the outbreak and called on world governments to tighten the screws on their plans to fight the disease.

Meanwhile, in the United States, markets have been taking a swan-dive. The Dow and other indices ticked up yesterday due to the Trump administration’s plan to declare a holiday for payroll taxes through the end of the year, but after an initial confidence boost on Tues., markets are again in a rout.

While intended to calm investor panic, the proposed 0% payroll tax is worse than worthless if companies decide to lay off workers anyways. That is exactly what is happening.

Companies across America and the world are shuttering offices and factories, oftentimes putting workers on furlough or asking that they telecommute or work from home. Some Americans are lucky enough to work at companies either with a work-from-home option or paid leave, but they are not in the majority.

For example, American Airlines (like other airlines around the world) has decided to cut back flights, but also asked employees to take an unpaid leave of absence.

Layoffs of this kind will continue as long as COVID-19 is ravaging domestic and global supply lines. Most at risk are blue-collar workers in manufacturing, distribution and retail. The Port of Los Angeles, just this week, laid off 145 truck drivers as ships loaded with goods still lay at anchor in foreign ports. The longer this goes on, the worse it will get.

So instead of cutting taxes, perhaps the federal government should be investing in safety net programs for working-class people who, through no fault of their own, are temporarily out of the job. In a country like the United States, where a full 78% of workers are living paycheck to paycheck, even a temporary furlough can mean sliding into debt for millions of families.

A payroll tax holiday can’t help you if you’re not on the payroll.

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Colby Anderson
Colby Anderson
Colby is a major of English at UTM, a writer and longstanding editor at the UTM Pacer.
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