hurricanemaxi
Joined: 04 Nov 2011
Posts: 120
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 Posted: Mon Dec 05, 2011 7:22 pm Post subject: Reid to Drop Proposed Tax Cut for Companies |
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U.S. Senate Majority Leader Harry Reid will abandon a plan to lower the payroll tax for employers and focus on continuing and expanding the current tax cut for workers, according to a Democratic aide.
Reid will propose reducing the payroll tax paid by employees to 3.1 percent from the current 4.2 percent, said the aide, who wasn’t authorized to discuss the plan publicly. Dropping the proposal to reduce the payroll tax for employers will shrink the package’s cost from $265 billion over 10 years to about $180 billion, the aide said.
Democrats plan to pay for the proposal by imposing a surtax on income over $1 million. The aide said the surtax would likely be less than 2 percent, lower than the 3.25 percent levy Democrats previously sought.
The proposal is being offered after the Senate blocked competing measures sponsored by Democrats and Republicans last week. Reid is revising the Democratic measure in an attempt to win some Republican support and secure the 60 votes that will likely be needed for Senate approval.
Reid will offer to end the millionaire surtax after 10 years instead of making it permanent, as Democrats previously proposed. He will also propose means-testing for food stamps, a provision Republicans included in their legislation. Reid won’t require high earners to pay higher Medicare premiums, as Republicans had also suggested.
Obama Remarks
President Barack Obama is to encourage Republicans to extend the payroll tax cut for workers in public remarks this afternoon.
Unless Congress acts, the current payroll tax cut -- which lowered the employee portion of the Social Security payroll tax from 6.2 percent to 4.2 percent for 2011 -- will expire on Dec. 31. Mark Zandi, chief economist at Moody’s Analytics, has said failure to extend the payroll tax cut into 2012 could cause U.S. gross domestic product to shrink by at least one-half of one percentage point during 2012.
With the millionaire surtax, Reid’s measure will still encounter resistance from Republicans who say such a provision will hurt small business owners who record business income on their individual tax returns.
“Senate Democrats say they have a credible ‘compromise’ proposal, which presumably does not include job-killing tax hikes or phony war savings,” Michael Steel, a spokesman for House Speaker John Boehner, said in an e-mail. “We look forward to reviewing it.”
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