Question

Make an economic argument (just one) on why a proposal to lower payroll taxes is a good thing or a bad thing. (The point here is to have you make an economic argument, not whether you think the policy proposal is good or bad.)

Answer 1

The government needs to collect the tax as it is the major source of its revenue. The government collects taxes from individuals and from the businesses. The salaried professionals pay tax on their income or wages and number of such individuals are very high. They are also an easy source for the government as their payroll is maintained by the firms and so is quite easy to collect the tax. There is a very little scope for tax evasion.
The big corporation tend evade taxes through legal loopholes. However, taxing those individuals reduces their disposable income which means they have lesser amount left for consumption. If the government is lowering the payroll tax then it will be good for the economy as it will increase the consumption in the economy.