Payroll taxation raises $1.7 trillion annually by taxing employment. This distorts the relative price relationship between labor utilization and consuming natural resources, artificially raising businesses’ hiring costs while lowering the relative cost of them using things.

Over decades the distortion has become severe, undercutting job creation. To correct it, Get America Working! proposes phasing out payroll taxes, which would lower tax-inflated hiring costs by 17%, and replacing the lost revenue with non-labor taxes on resource consumption and pollution, raising those costs by 13%. That adds up to a relative price shift of 30%, making hiring 30% less expensive relative to using things – a giant price signal to businesses shouting HIRE!

There are more than 20 non-labor taxes which in various combinations and at modest rates could replace payroll tax revenues. In fact, they could generate multiples of the $1.7 trillion payroll taxes raise today.

Other OECD countries have demonstrated that tax shifting works. Most recently, the Ex’Tax Project proposed to shift more of Europe’s tax burden from labor to resource consumption to incentivize hiring and conservation.

The US can, too. Get America Working! estimates payroll tax shifting would result in roughly 50 million jobs. With so many more Americans working, dependency costs would fall, the economy and the tax base would grow, Social Security and Medicare financing would improve, and fiscal health would become robust.

Payroll tax shifting is a fiscally responsible, market-driven, budget-neutral, “free” stimulus that wouldn’t increase deficits or net taxes one dime. There’s a giant potential alliance waiting to come together around it.

But first, stakeholders and decisionmakers will need to get out of the old “third rail” mindset that treats payroll taxation as sacrosanct, and recognize the opportunity of this new policy framework. That’s where we come in.