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Payroll tax is likely the tax you most want to have cut, but will it ever happen?

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This story appears in the August 2003 issue of Entrepreneur. Subscribe »

Congress is debating $350 billion in new tax cuts. But if you're holding your breath for a cut in payroll taxes, you might as well exhale. The payroll tax has been called the "ignored tax," because it never gets cut. Payroll taxes make up 34.9 percent of federal revenues and are expected to increase to 36.3 percent of federal revenues by 2004, according to the Tax Policy Center, a nonprofit, nonpartisan group that studies tax policy. Payroll taxes currently constitute 15.3 percent of payroll in employee and employer contributions combined.

Entrepreneurs indicate in surveys that the payroll tax is their greatest obstacle to business and job expansion, says Robert J. Walker, president of Get America Working!, a bipartisan employment policy group in Arlington, Virginia. "Cutting the payroll tax by 10 percent would increase employment 3 percent in the short term," he says. "That's a lot of jobs."

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