Republicans Set To Raise Taxes On Middle Class?

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Republicans don’t want the Bush tax cuts to expire for the wealthiest, but they’re fine with letting the payroll tax cut that Obama passed last do so?


The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a “payroll tax” on practically every dime they earn.

There are other differences as well, and Republicans say their stand is consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.

So how much are we talking?

At issue is a tax that the vast majority of workers pay, but many don’t recognize because they don’t read, or don’t understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama’s request to reduce the workers’ share to 4.2 percent for one year; employers’ rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1. […]

Social Security payroll taxes apply only to the first $106,800 of a worker’s wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.

So why are they against one, but not the other?

Republicans cite key differences between the two “temporary” taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it’s better to reduce income tax rates for people and for companies than to extend the payroll tax break.

“We don’t need short-term gestures. We need long-term fundamental changes in our tax structure and our regulatory structure that people who create jobs can rely on,” said Sen. Lamar Alexander, R-Tenn., when asked about the payroll tax matter.

House Majority Leader Eric Cantor, R-Va., “has never believed that this type of temporary tax relief is the best way to grow the economy,” said spokesman Brad Dayspring.

Long term tax relief for the wealthiest isn’t the best way to grow the economy either. Well, in general, neither are tax breaks. Infrastructure spending is much more stimulative in the long term.

Still, it’s pretty clear what’s going on here. If the idea comes from Obama, it’s bad. If it comes from Republicans, it’s good.

And so it goes…