Extending the Payroll Tax Cut Through 2012
Today, I will take part in the Payroll Tax Cut Conference Committee’s first meeting, as we begin our work to reach agreement on an employee payroll tax cut for all of 2012.
Just before the holidays, the payroll tax cut, which had been set to expire at the end of December, was extended for two months through February. This extension prevented a tax increase on 6.7 million workers in Pennsylvania and provided some good news for families going into Christmas.
The payroll tax cut reduces employees’ share of the Social Security payroll tax from 6.2 percent to 4.2 percent of earnings. For the average Pennsylvania worker, this tax cut will boost take-home pay by nearly $1,000 in 2012.
The additional money in workers’ wallets and pocketbooks will help families buy gas, make car payments, pay for housing and put food on the table. The increased consumer spending will help sustain the economic recovery.
According to an independent analysis, there would be 19,700 fewer jobs in Pennsylvania in 2012 without the payroll tax cut. With almost half a million Pennsylvanians out of work, we cannot afford this hit to our economy.
The Conference Committee is comprised of 20 members of Congress – 4 Senate Democrats, 3 Senate Republicans, 5 House Democrats and 8 House Republicans. As the Chairman of the Joint Economic Committee and author of the Middle Class Tax Cut Act, I was appointed to be a Senate conferee.
The task before us is to reach an agreement before the end of February to make certain that this money stays in the pockets of middle class Americans.
I initially proposed that these cuts be paid for by a modest surtax on annual income exceeding a million dollars because I believe that is a fair and reasonable way to make sure we extend these middle class cuts without adding to our debt. I believe it also makes great economic sense. However, I am open to other ideas. The key is that we get this done.
The Conference Committee will also take up the issue of how to continue unemployment insurance for those workers who have been out of work for more than six months.
Some say that Washington only focuses when it’s up against a deadline. Well, we have until the end of February to figure this out. I’m confident we will.