GOP wants to raise taxes. Obama vows to block:

[Skjellyfetti]

News flash: Congressional Republicans want to raise your taxes.

Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?

Apparently not.

Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn.

There are other differences as well, and Republicans say their stand is consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.

"It's always a net positive to let taxpayers keep more of what they earn," says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again." The Texas lawmaker is on the House GOP leadership team.

The debate is likely to boil up in coming weeks as a special bipartisan committee seeks big deficit reductions and weighs which tax cuts are sacrosanct.

At issue is a tax that the vast majority of workers pay, but many don't recognize because they don't read, or don't understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1.

Obama cited the payroll tax in his weekend radio and Internet address Saturday, when he urged Congress to work together on measures that help the economy and create jobs. "There are things we can do right now that will mean more customers for businesses and more jobs across the country. We can cut payroll taxes again, so families have an extra $1,000 to spend," he said.

Social Security payroll taxes apply only to the first $106,800 of a worker's wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.

The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.

The 12-month tax reduction will cost the government about $120 billion this year, and a similar amount next year if it's renewed.

That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, "no matter how well-intended," will push the deficit higher, making the panel's task that much harder, Camp's office said.

But Republican lawmakers haven't always worried about tax cuts increasing the deficit. They led the fight to extend the life of a much bigger tax break: the major 2001 income tax reduction enacted under Bush. It was scheduled to expire at the start of this year. Obama campaigned on a pledge to end the tax break only for the richest Americans, but solid GOP opposition forced him to back down.

Many Republicans are adamant about not raising taxes but largely silent on what it would mean to let the payroll tax break expire.

Republicans cite key differences between the two "temporary" taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it's better to reduce income tax rates for people and for companies than to extend the payroll tax break.

"We don't need short-term gestures. We need long-term fundamental changes in our tax structure and our regulatory structure that people who create jobs can rely on," said Sen. Lamar Alexander, R-Tenn., when asked about the payroll tax matter.

House Majority Leader Eric Cantor, R-Va., "has never believed that this type of temporary tax relief is the best way to grow the economy," said spokesman Brad Dayspring.

The nonpartisan Congressional Budget Office says payroll tax reductions give the economy a short-term boost. But it says the benefit is bigger if employers get the tax break instead of, or along with, workers.

Some top Republicans have taken a wait-and-see approach, expecting the payroll tax issue to be a bargaining chip in the upcoming debt reduction talks.

Neither House Speaker John Boehner, R-Ohio, nor Senate Minority Leader Mitch McConnell, R-Ky., has taken a firm stand on whether to extend the one-year tax cut.

Most GOP presidential candidates also are treading lightly.

Former Massachusetts Gov. Mitt Romney did not flatly rule out an extra year for the payroll tax cut, but he "would prefer to see the payroll tax cut on the employer side" to spur job growth, his campaign said.

Former House speaker Newt Gingrich said Republicans will fall under increasing pressure to extend the payroll tax cut. If they refuse, he said in a recent speech, "we're going to end up in a position where we're going to raise taxes on the lowest-income Americans the day they go to work."

Many Democrats also are ambivalent about Obama's proposed tax cut extension. They are more focused on protecting social programs from deep spending cuts. Some worry that a multiyear reduction in the tax designated for Social Security could undermine that program's health and stature.

For decades the payroll tax generated more revenue than the Social Security paid out in benefits. The excess was used to fund other government operations. Last year, however, Social Security benefits began outstripping revenue from its designated sources, forcing the program to start tapping its "trust fund" of government obligations.

http://hosted.ap.org/dynamic/stories/U/ ... TE=DEFAULT" onclick="window.open(this.href);return false;

[AZGrizFan]

Was playing poker Friday night with a business-owner friend of mine, who stated that they were required to "make up" that 2% deduction as part of THEIR contribution....can any business owner here confirm/refute that statement?

[dbackjon]

Typical hypocrasy.


This tax relief puts money in the pockets of lower and middle class Americans who SPEND IT. Not hoard it or move it off-shore.

[travelinman67]

Was playing poker Friday night with a business-owner friend of mine, who stated that they were required to "make up" that 2% deduction as part of THEIR contribution....can any business owner here confirm/refute that statement?

I haven't seen that in any of the bulletins or alerts I receive. Kinda suspect that may have come from some anti-tax/alarmist group. Doesn't seem feasible for Congress to pass any bill that would result in an employer tax increase. What kills me about the SSI tax break is that it just accelerates the depletion. Kinda a double edged sword for Capitol Hill.
Past attempts to provide income tax relief for the middle/working class has generally failed as Uncle Sam always finds a way to cancel/mitigate the relief at tax time (Feds seem to be following CA, who lead the way with creative tax lien/garnishing. Have a late veh. registration, property tax bill [which can include delinquent utility balances], citation, parking ticket, even private debt? CA could establish a tax lien agaist future returns...without notifying the taxpayer, and unbeknownst to the taxpayer who earnestly, honestly files their return, expecting a refund, rather than a check, they get a letter informing them their refund has been applied to some outstanding debt...more of CA's leftist, self-destructive legislating). The folks on Capitol Hill and PA Ave. knew this, which is why they went with the payroll tax reduction...a way of genuinely putting money back in the worker's pockets, and hence, back in the economy...but at a painful cost to SSI.

Sad part is, this is all still just smoke and mirrors to mask the real problem of permanent or long-term regulatory and tax relief to ALL businesses, not just business the poli's are attempting to support to further their social engineering schemes.

[JoltinJoe]

Was playing poker Friday night with a business-owner friend of mine, who stated that they were required to "make up" that 2% deduction as part of THEIR contribution....can any business owner here confirm/refute that statement?

I don't think that's true. I can check, though, and see if we're paying that.

[Bronco]

I will guess the usual shenanigans...not a clean bill. Somethings attached that doesn't sit well and when they fight it the willing accomplices in the media (Did you see where CBS was selling Obama mugs and shirts on their web site) will say look at those heartless bastards they don't care for the working families.

[danefan]

Was playing poker Friday night with a business-owner friend of mine, who stated that they were required to "make up" that 2% deduction as part of THEIR contribution....can any business owner here confirm/refute that statement?

http://www.irs.gov/pub/irs-pdf/p15.pdf" onclick="window.open(this.href);return false;

The employee's contribution has been temporarily reduced to 4.2% for 2011.
The employer's portion remained at 6.2%.

Employers aren't making it up, they just didn't get the cut.

[JohnStOnge]

Am I supposed to be upset that the 46% of the people who don't pay any income tax and contribute little to carrying the overall load are actually going to pay a little more?

The payroll tax is much closer to the way it should be. The tax load should be more equitably distributed so that people actually have an appreciation for what things cost.

BTW, at least as of 2007, the "rich" still carried a disproprtionate share of the load when only social insurance taxes are considered. If you go to the tables at http://www.taxpolicycenter.org/taxfacts ... ?Docid=558" onclick="window.open(this.href);return false; you will see that in 2007 the bottom 20% paid 4.8% of social insurance taxes, the middle 60% paid 52.1%, and the upper 20% paid 42.9% (doesn't quite at up to 100, presumably due to rounding). So the "poor" still get a pass and the "rich" still carry more than their share of the burden.

[AZGrizFan]

What kills me about the SSI tax break is that it just accelerates the depletion. Kinda a double edged sword for Capitol Hill.

This is what concerns me about the break. It's a classic ploy to buy votes.

[Baldy]

News flash: Congressional Republicans want to raise your taxes.

Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?

Apparently not.

Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn.

There are other differences as well, and Republicans say their stand is consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.

"It's always a net positive to let taxpayers keep more of what they earn," says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again." The Texas lawmaker is on the House GOP leadership team.

The debate is likely to boil up in coming weeks as a special bipartisan committee seeks big deficit reductions and weighs which tax cuts are sacrosanct.

At issue is a tax that the vast majority of workers pay, but many don't recognize because they don't read, or don't understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1.

Obama cited the payroll tax in his weekend radio and Internet address Saturday, when he urged Congress to work together on measures that help the economy and create jobs. "There are things we can do right now that will mean more customers for businesses and more jobs across the country. We can cut payroll taxes again, so families have an extra $1,000 to spend," he said.

Social Security payroll taxes apply only to the first $106,800 of a worker's wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.

The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.

The 12-month tax reduction will cost the government about $120 billion this year, and a similar amount next year if it's renewed.

That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, "no matter how well-intended," will push the deficit higher, making the panel's task that much harder, Camp's office said.

But Republican lawmakers haven't always worried about tax cuts increasing the deficit. They led the fight to extend the life of a much bigger tax break: the major 2001 income tax reduction enacted under Bush. It was scheduled to expire at the start of this year. Obama campaigned on a pledge to end the tax break only for the richest Americans, but solid GOP opposition forced him to back down.

Many Republicans are adamant about not raising taxes but largely silent on what it would mean to let the payroll tax break expire.

Republicans cite key differences between the two "temporary" taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it's better to reduce income tax rates for people and for companies than to extend the payroll tax break.

"We don't need short-term gestures. We need long-term fundamental changes in our tax structure and our regulatory structure that people who create jobs can rely on," said Sen. Lamar Alexander, R-Tenn., when asked about the payroll tax matter.

House Majority Leader Eric Cantor, R-Va., "has never believed that this type of temporary tax relief is the best way to grow the economy," said spokesman Brad Dayspring.

The nonpartisan Congressional Budget Office says payroll tax reductions give the economy a short-term boost. But it says the benefit is bigger if employers get the tax break instead of, or along with, workers.

Some top Republicans have taken a wait-and-see approach, expecting the payroll tax issue to be a bargaining chip in the upcoming debt reduction talks.

Neither House Speaker John Boehner, R-Ohio, nor Senate Minority Leader Mitch McConnell, R-Ky., has taken a firm stand on whether to extend the one-year tax cut.

Most GOP presidential candidates also are treading lightly.

Former Massachusetts Gov. Mitt Romney did not flatly rule out an extra year for the payroll tax cut, but he "would prefer to see the payroll tax cut on the employer side" to spur job growth, his campaign said.

Former House speaker Newt Gingrich said Republicans will fall under increasing pressure to extend the payroll tax cut. If they refuse, he said in a recent speech, "we're going to end up in a position where we're going to raise taxes on the lowest-income Americans the day they go to work."

Many Democrats also are ambivalent about Obama's proposed tax cut extension. They are more focused on protecting social programs from deep spending cuts. Some worry that a multiyear reduction in the tax designated for Social Security could undermine that program's health and stature.

For decades the payroll tax generated more revenue than the Social Security paid out in benefits. The excess was used to fund other government operations. Last year, however, Social Security benefits began outstripping revenue from its designated sources, forcing the program to start tapping its "trust fund" of government obligations.

http://hosted.ap.org/dynamic/stories/U/ ... TE=DEFAULT" onclick="window.open(this.href);return false;

When the Donks were trying their best to let the Bush tax cuts expire and make everyone's taxes go up, they were screaming from the rafters how it wasn't a tax increase.

The hypocrisy....