Congress is certainly not lacking for plans to extend the payroll tax cut holiday. What they are lacking is plans that can pass.
The latest version is a bipartisan bill that was born out of the shared sentiment of Sen. Susan Collins, R-Maine, and Sen. Claire McCaskill, D-Mo., that Congress was “driving them crazy.”
“We took what we believed to be the best Democratic and Republican ideas as well as some of our own,” Collins said today at a press conference.
“It’s balanced and it’s a compromise,” McCaskill added.
The senators’ plan seems to be answering in part the main Republican criticism of the Senate Democratic payroll tax proposal, that the bill would hurt small businesses by paying for the bill with a surtax on Americans making more than $1 million.
Their bill is still paid for by a 2 percent surtax on those who earn $1 million or more a year, but it includes a “carve out” to protect small business owner-operators who pay their taxes on individual income tax returns.
“We wanted to make sure that we are not imposing a surtax on the job creators in this country,” Collins said.
The bill would extend the 4.2 percent payroll tax cut for employees that otherwise would expire at the end of this month. The payroll tax cut would also be extended to employers on the first $10 million of their payroll.
“That would help our small and medium sized businesses that are the economic backbone of our economy to create and preserve jobs,” Collins said.
The bill would also authorize a one-time $10 billion appropriation for transportation infrastructure, and invests into job creation programs like job training. OMB would be tasked to come up with a study for consolidating most job training programs under one agency.
Also contributing to paying for the bill is a repeal of unneeded tax subsidies for the five largest oil companies, which would generate additional revenue.
The plan has not yet been scored by the nonpartisan Congressional Budget Office.
The senators said their bill can gain additional bipartisan support, but it’s not clear as of now how much support they can get. Republicans almost certainly will still oppose any millionaires’ surtax, even with the small business “carve out.”
“My hope is that when all the other alternatives are exhausted, people will do the right thing and turn to our proposal,” Collins said.
But the senators should not hold their breath waiting for support just yet.
Senate Minority Leader Mitch McConnell, R-Ky., said today he is not in support of the proposal.
“I am not in favor of raising taxes on working people,” McConnell said. “I think most America — most Republicans are very reluctant to raise taxes on anyone during this economic crisis that we find ourselves in.”