Senate Democrats push Obama payroll tax cut

WASHINGTON -- When President Obama heads to Scranton, Pa., Wednesday to make his case for cutting taxes for most workers, he'll offer his first salvo in an end-of-the-year battle to extend and expand the payroll tax holiday.

His fellow Democrats have already started arguing that Republicans — who say any tax increase is a non-starter — are effectively threatening to hike taxes on the middle class to protect the wealthy.

Senate Majority Leader Harry Reid, D-Nev., said the upper chamber could vote this week to cut payroll taxes next year for most workers through a 3.25% surcharge on wealthy earners.

That Obama-backed plan will almost certainly be blocked by Republicans, who oppose any new taxes.

The vote on Obama's plan — which would slice the payroll tax from 6.2% to 3.1% — comes as a 2% payroll tax holiday enacted last year is set to expire Dec. 31.

Obama's plan would also halve the tax paid by employers on a business's first $5 million of payroll.

Reid indicated that the Democrats plan on making the case over the coming weeks that Republicans are effectively pushing to take "935 hard-earned dollars" from the average American family.

"These are the same Republicans who loudly claim to care about keeping taxes low," Reid said. "But too often it seems they only care about keeping taxes low for the richest of the rich."

The Obama administration has posted a tax calculator on the White House website, so Americans can see how much is personally at stake if the payroll tax holiday isn't extended.

Sen. Jon Kyl, R-Ariz., said on Fox News Sunday that he would oppose expansion of the payroll tax holiday, saying it has not stimulated the economy.

The White House noted Monday that several leading GOP lawmakers supported a payroll tax holiday in the past — including Senate Minority Leader Mitch McConnell of Kentucky and Sens. Orrin Hatch of Utah, Kay Bailey Hutchinson of Texas, Lamar Alexander of Tennessee and Kyl.

"These Republican senators believe that a payroll tax cut is a good thing — at least they did," said White House spokesman Jay Carney.

Michael Steel, a spokesman for House Speaker John Boehner, said House GOP lawmakers are willing to negotiate an extension of the payroll tax holiday, but the surcharge "makes no sense whatsoever."