The Case for a Payroll Tax Cut
How about an immediate and permanent reduction in the payroll tax, financed by a gradual, permanent, and substantial increase in the gasoline tax? Make the two tax changes equal in present value, so while the package results in a short-run budget deficit, there is no long-term budget impact. Call it the create-jobs, save-the-environment, reduce-traffic-congestion, budget-neutral tax shift.
Okay, I have to work on the marketing.
Update: Gauti Eggertsson makes the case against supply-side tax cuts in the current environment. But note the caveat that if the tax cuts increase aggregate demand, they are okay in his model as well.