As Congress wrangles over how and whether to extend the payroll tax cut, a prominent budget analyst is urging Washington to scrap the plan altogether and return to the stimulus-era credit that the payroll tax cut replaced.
Roberton Williams, a senior fellow with the Tax Policy Center, this week called on lawmakers to revive the so-called Making Work Pay tax credit in lieu of continuing the payroll provision.
The credit was the tax benefit for working-class families included in the 2009 stimulus. Congress did not extend the credit at the end of 2010, voting instead to approve a 2-point reduction in the payroll tax.
Williams argued at the time that the tax-cut swap would end up hurting the working poor, claiming the stimulus credit was more valuable for them than the payroll provision. Now that the payroll tax cut is set to expire, Williams said Congress should seize the opportunity to reverse course and bring back Making Work Pay.
"It's got more bang for the buck because it directs more money to people who will spend it," he told FoxNews.com.
The logic behind Williams' argument is as follows:
The stimulus credit gave single workers up to $400 a year, and couples up to $800. Many workers got the full amount, provided they reported a nominal income over the course of the year.
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