Senate Democrats plan to unveil legislation this week that will “extend and expand” the payroll tax cut next year.
“This legislation does more than just protect the tax cuts Americans already count on, it deepens and expands that tax relief as well,” Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor. “Next year 120 million American families will keep an average of $1,500 because of this legislation. That means they’ll have more money to spend on necessities like gas and food and will buy things that help spur economic growth in their communities.”
The current 2 percent payroll tax cut is set to expire on Dec. 31. The legislation would extend the cut through next year, and expand it to 3.1 percent, saving the average American family about $1,500 on their taxes over the next year. The tax cut would also cut in half, from 6.2 percent to 3.1 percent, the tax on the first $5 million in wages to businesses.
The $265 billion bill, which will be proposed this week by Sen. Bob Casey, D-Pa., will be fully paid for by a 3.25 percent surtax on Americans making more than $1 million.
The surtax will be a non starter for Senate Republicans who have consistently opposed attempts to pay for pieces of Obama’s jobs bill in the same way.
Senate Minority Leader Mitch McConnell, R-Ky., called the move by Senate Democrats a “symbolic show vote,” predicting that it would just lead to more tension on Capitol Hill, as Democrats know Republicans won’t go along with the bill as it stands now.
“I think it’s safe to say that any attempt to pass another temporary stimulus funded by a permanent tax hike on the very people we’re counting on to create the private sector jobs we need in this country is purely political and not intended to do a thing to help the economy, since we already know it’s likely to fail with bipartisan opposition,” McConnell said on the Senate floor.
McConnell’s comments today came after the number two Republican in the Senate, Senator Jon Kyl, R-AZ., came out in opposition to the tax cut on the Sunday talk shows.
“The problem here is that the payroll tax doesn’t go into general revenue, it supports Social Security. And you can’t keep extending the payroll tax holiday and have a secure Social Security. That’s the first problem,” Kyl said on “Fox News Sunday.” “By taxing the people who provide the jobs, you put off the day we have economic recovery and job creation in this country.”
Today, Reid said that he was disappointed that some like Kyl are already coming out in opposition to the tax cut.
“Those who claim they care about keeping taxes low, but too often it seems they only care about keeping taxes low for the richest of the rich,” Reid said. “If Republicans block passage of this legislation, they will be taking money out of the pockets of American families.”
On a conference call with reporters today, Reid would not divulge how the bill could get changed if and when it is voted down by Republicans opposed to the tax on millionaires. But Reid hinted that the expansion part of the current tax cut holiday could potentially be dropped during negotiations after the initial vote.
“We would like the expanded version that Senator Casey is sponsoring, we like that much more than extending what we now have. We like both,” Reid said.
Similarly, Sen. Chuck Schumer, D-N.Y., said on “Meet the Press” that Democrats were open to finding other ways to pay for the payroll tax holiday.
“I would hope we would pass it, “Schumer said. “I think it’s very hard for Republicans to vote against this, given their past history of defending the tax cuts for the wealthiest among us. If they don’t, if it doesn’t pass once, we’re going to put it on the floor again and again. And we would be open to other ideas of paying for it if this one fails.”