The Associated Press reports that congressional Republicans are considering allowing the payroll tax cut to expire at the end of the year — a move President Barack Obama says could cost up to 1 million jobs.
The tax, which funds Social Security, now stands at 4.2 per cent for employees for 2011 — down from 6.2 per cent — and GOP lawmakers, worried by rising deficits and the nation’s booming debt, are gearing up to block extending the reduced rate through next year. The employer contribution remains at 6.2 per cent.
“It’s always a net positive to let taxpayers keep more of what they earn,” said Rep. Jeb Hensarling (R-TX), “but not all tax relief is created equal for the purposes of helping to get the economy moving again.”
But their worry about debt and deficits did not prevent the lawmakers from demanding the continuation of the Bush tax cuts on wealthy Americans if they were to be extended for those with lesser incomes.
The payroll tax cut most benefits employees making less than $106,800 a year — including those whose incomes are so low they pay no federal income tax, but still have their payroll tax withheld from their paychecks.
Earlier this month Obama said Congress failing to extend the tax break and unemployment benefits “could mean 1 million fewer jobs and half a per cent less growth.”
Neither Speaker of the House John Boehner (R-OH) or Senate Minority Leader Mitch McConnell (R-KY) has taken a public position on the issue.
Obama says, the extension of the payroll tax cut would bring the average American family an additional $1,000 each year — and will be a key component of the job creation package he plans to reveal in September.