New Payroll Tax Cut Plan

With President Obama taking the lead, Democrats in the Congress laid out new plans in Washington, D.C. today to extend a payroll tax cut that expires at the end of the year, again daring Republicans to oppose it in an end-of-year battle that could stretch until Christmas.  A new GOP plan is now expected on Tuesday.

"Keep your word to the American people and don't raise taxes on them right now," the President said from the White House Briefing Room, as he demanded that Republicans back the new Democratic plan on the payroll tax cut.

What's in it? Well, the new plan differs in several ways from the plan proposed last week by Senate Democrats:

  • The cost drops from $265 billion to around $180 billion
  • A proposed payroll tax break for businesses would be scrapped
  • The payroll tax cut of 2% would still be increased to 3.1% under this plan
  • Surtax on those making over $1 million would end after 10 years, dropping from 3.25% to under 2%
  • Uses some "pay-fors" from the Supercommittee to offset the cost
  • Moves to adopt GOP idea to means-test both jobless benefits and food stamps for those making more than $1 million/year The immediate Republican reaction was basically the back of the hand, as the GOP wants no part of any tax increase on the wealthy. As for the new GOP plan, it may be about $200 billion and include some of the same measures outlined last week by Senate Republicans, which included efforts to limit government benefits to those in the top income brackets. Time is getting away from lawmakers - there are only 14 work days until Christmas Eve.  And in the Congress, that is a blink of an eye.