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Entries in Payroll (5)

Sunday
Dec112011

Is It the End of the Line for Payroll Tax Holiday?

Ryan McVay/Photodisc/Thinkstock(WASHINGTON) -- Families and individuals who rely on the $1,000 yearly temporary payroll tax holiday from the government can expect Republicans and at least one Democrat to pull support for the measure at the end of 2012.

“I believe that we should extend the payroll tax holiday another year, avoid a tax increase on working people for another year,” Senate Minority Leader Mitch McConnell, R-Ky., said on Fox News Sunday.

President Barack Obama has made extending the payroll tax holiday a priority, and it is also a partisan talking point in his campaign to retain the White House in 2012.

“This is not about me. They shouldn’t extend the payroll tax cut for me. They shouldn’t extend unemployment insurance for me. This is for 160 million people who, in 23 days, are going to see their taxes go up if Congress doesn’t act,” Obama said, standing in front of a countdown timer, driving home the impending deadline to extend the payroll tax holiday.

A group of Republicans and some economists have argued that an extension of the payroll tax holiday would waste money and do nothing to stimulate job creation, but Democrats and the Republican leadership have agreed that a temporary extension is necessary to protect working class Americans.

If the payroll tax holiday is extended for one year, the provision would expire after the 2012 elections, which take place in November.

Copyright 2011 ABC News Radio

Wednesday
Nov302011

Payroll Tax Cuts: Will They Bankrupt Social Security?

Comstock/Thinkstock(WASHINGTON) -- The Democratic winds of high-income taxation are picking up and the Republican thunderheads of off-setting spending cuts are rolling in as Capitol Hill braces for yet another partisan thunderstorm.

This time the battle is over payroll taxes, which fund Social Security, and whether to end, extend or expand the 2 percent cut that is set to expire on Dec. 31.

The one-year cut to Social Security’s funding stream decreased federal revenues by $112 billion in 2011, but the already-dwindling trust fund for Social Security remained untouched because the government borrowed extra money to fill the gap, adding instead to the $1.3 trillion deficit.

“On paper [the payroll tax cut] does nothing to Social Security,” said Andrew Biggs, a resident scholar at the American Enterprise Institute.  “It is just as solvent as it was before.  But that’s not the sort of bookkeeping that you would do in the private sector.”

Senate Democrats want not only to extend the current tax break, but further reduce it from the original 6.2 percent to 3.1 percent.  The Democrats' proposal also cuts employers’ share of the payroll tax in half, down to 3.1 percent on the first $5 million paid in wages.

Congressional Republicans, who are wary of even extending the cut at its current 2 percent level, are unlikely to support the expanded cuts that Democrats are pushing for.

“The problem here is that the payroll tax doesn’t go into general revenue, it supports Social Security,” Sen. Jon Kyl, R-Ariz., the number two Republican in the Senate said on Fox News Sunday.  “And you can’t keep extending the payroll tax holiday and have a secure Social Security.”

Biggs, the former principal deputy commissioner of the Social Security Administration, said Social Security is already running on a deficit.  Even without the payroll tax cuts, revenues cannot keep up with the flood of baby boomers who are retiring at the rate of about 10,000 per day, he said.

“In the short term the government can make up the difference in the lost payroll taxes,” Biggs said.  “Social Security benefits will continue to be paid.  The real question is: are we undermining the financing of a program whose finances are already precarious?”

When the tax cut was enacted as part of the 2010 stimulus package, it was intended to be a one-year, short-term break for middle-income Americans.   A family earning $50,000 per year saved about $1,000 on their taxes in 2011 because of the cut.

“If it doesn’t [get extended] every paycheck in the country will go down on Jan. 1,” said Chuck Marr, the director of federal tax policy at the Center for Budget and Policy Priorities.  “It’s real money.  Every person you see every day has a thousand dollars less money, and that’s a lot of bucks.”

Copyright 2011 ABC News Radio

Friday
Sep092011

Obama's Jobs Plan Cheered by Economists

Alex Wong/Getty Images(WASHINGTON) -- President Obama's $447 billion American Jobs Act is getting mostly solid marks from business experts and economists, who worry that a divided Congress may be unable to pass anything meaningful in time.

The president's plan would eliminate payroll taxes for companies that add workers or increase wages of current workers, but that benefit is capped to the first $50 million in payroll increases.  The plan has a $4,000 tax credit for employers who hire long-term unemployed workers, plus a "returning heroes" hiring tax credit of $5,600 to $9,600 for each unemployed vet hired.

The proposals include reforming the unemployment insurance program, a $50 billion extension in unemployment insurance to prevent five million people looking for work from losing benefits and state assistance for wage insurance.

Small businesses would get a 50 percent cut in the first $5 million in payroll taxes.  The White House said 98 percent of businesses have payroll below that threshold.

Political analysts say Republicans may be in favor of the tax cuts in the president's proposals, but will oppose the parts of the $447 billion plan that call for new government spending.  The spending measures include a $50 billion investment in infrastructure, a bipartisan National Infrastructure Bank and aid to state governments.

Cecilia Rouse, economics professor at Princeton and former member of President Obama's Council of Economic Advisers, said the president is proposing a "sensible" package of strategies while the private sector continues to struggle.  Rouse said she was "particularly pleased" to see an extension in unemployment insurance for an additional year.

"They are a critical form of assistance for so many families as well as one of the fastest and most effective ways of helping to increase economic activity during a downturn," she said.

Rouse said the proposed employment tax cuts, for both employers and individuals, are warranted, and investments in infrastructure "just make sense" given the numbers of unemployed construction workers and the low rates at which the federal government can borrow.  Further state aid will help the economy a great deal given that public sector employment has been unusually hard hit in this downturn.

But she would have liked for Obama to have proposed more innovation for services that help the unemployed find jobs.

Copyright 2011 ABC News Radio

Tuesday
Sep062011

Jim DeMint Opposes Obama's Proposal to Extend Payroll Tax Cuts

Mark Wilson/Getty Images(WASHINGTON) -- Here’s a sentence you won’t read too often: Sen. Jim DeMint is coming out against a tax cut.

It’s not just any tax cut. DeMint, R-S.C. -- one of the most prominent Tea Party and anti-tax voices in the country -- told ABC News that he’s inclined to oppose President Obama’s proposal for an extension of the payroll tax cut because they're temporary in nature.

“I have to look at it as a businessman, and the things he’s doing makes me want to pull my hair out. It’s like he doesn’t understand. He’s talking about a $5,000 credit for someone -- a business who hires someone,” DeMint said Tuesday on ABC's Top Line. “An employer isn’t going to look out five or 10 years and expand their plan based on a temporary payroll tax cut.”

Asked if that means he’d vote against a tax cut, DeMint responded, “I don’t know what I’ll do on that. If that’s all there is, I’m unlikely to support it. The president needs to do something that works with our free market economy. We’re not Europe,” he said. “I don’t know if I’ll vote against it or not. It’s not really going to help create more jobs.”

DeMint also said he’s “disappointed” that Texas Gov. Rick Perry was forced to cancel on the presidential forum DeMint organized in his home state yesterday, and said he’s not yet convinced whether Perry is a strong candidate.

“I don’t know yet. I’ve never met Rick,” DeMint said. “We’ve talked on the phone several times, and I know he’s the new one in the race and he’s attracted some attention. But it’s a long run between now and the final nomination.”

DeMint said he’s willing to give Perry a shot even though he was once a Democrat who supported Al Gore for president in 1988.

“You know, Ronald Reagan was a Democrat, and certainly he became one of the premier conservatives,” he said. “I’m a recovering earmarker and I led the battle to stop earmarks. So we can give the candidates room to change position. But we can’t give the candidates room to mislead what they’ve done.”

Copyright 2011 ABC News Radio

Friday
Mar042011

Unemployment Rate Drops to Lowest Level Since April 2009

Stockbyte/Thinkstock(WASHINGTON) -- Employers added 192,000 jobs in February, bringing the unemployment rate down from 9 to 8.9 percent -- its lowest level since April 2009.

The private sector, factoring out government layoffs, saw 22,000 workers added to payrolls.

Economists were expecting to see approximately 185,000 new jobs added, slightly fewer than the government reported on Friday.

Copyright 2011 ABC News Radio







ABC News Radio