Archive for Monday, August 22, 2011

GOP may OK tax increase Obama hopes to block

August 22, 2011


— News flash: Congressional Republicans want to raise your taxes.

Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?

Apparently not.

Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different “temporary” tax cut should end as planned. By their own definition, that amounts to a tax increase.

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.

GOP long-term goal

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.

“It’s always a net positive to let taxpayers keep more of what they earn,” says Rep. Jeb Hensarling, “but not all tax relief is created equal for the purposes of helping to get the economy moving again.” The Texas lawmaker is on the House GOP leadership team.

The debate is likely to boil up in coming weeks as a special bipartisan committee seeks big deficit reductions and weighs which tax cuts are sacrosanct.

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.

Obama’s stance

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.

Obama cited the payroll tax in his weekend radio and Internet address Saturday, when he urged Congress to work together on measures that help the economy and create jobs. “There are things we can do right now that will mean more customers for businesses and more jobs across the country. We can cut payroll taxes again, so families have an extra $1,000 to spend,” he said.

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.

The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.

The 12-month tax reduction will cost the government about $120 billion this year, and a similar amount next year if it’s renewed.

That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, “no matter how well-intended,” will push the deficit higher, making the panel’s task that much harder, Camp’s office said.

Debate about the issue

But Republican lawmakers haven’t always worried about tax cuts increasing the deficit. They led the fight to extend the life of a much bigger tax break: the major 2001 income tax reduction enacted under Bush. It was scheduled to expire at the start of this year. Obama campaigned on a pledge to end the tax break only for the richest Americans, but solid GOP opposition forced him to back down.

Many Republicans are adamant about not raising taxes but largely silent on what it would mean to let the payroll tax break expire.

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.

The nonpartisan Congressional Budget Office says payroll tax reductions give the economy a short-term boost. But it says the benefit is bigger if employers get the tax break instead of, or along with, workers.

Wait-and-see approaches

Some top Republicans have taken a wait-and-see approach, expecting the payroll tax issue to be a bargaining chip in the upcoming debt reduction talks.

Neither House Speaker John Boehner, R-Ohio, nor Senate Minority Leader Mitch McConnell, R-Ky., has taken a firm stand on whether to extend the one-year tax cut.

Most GOP presidential candidates also are treading lightly.

Former Massachusetts Gov. Mitt Romney did not flatly rule out an extra year for the payroll tax cut, but he “would prefer to see the payroll tax cut on the employer side” to spur job growth, his campaign said.

Former House speaker Newt Gingrich said Republicans will fall under increasing pressure to extend the payroll tax cut. If they refuse, he said in a recent speech, “we’re going to end up in a position where we’re going to raise taxes on the lowest-income Americans the day they go to work.”


jafs 2 years, 7 months ago

This one is odd.

Republicans arguing to allow this tax cut to expire, but calling for the continuation of the Bush tax cuts is very contradictory.

At the same time, given the problems with SS, it doesn't seem like a good idea to me to have less going into the system.

That will just make the problems with SS worse over time, not more sustainable.


ljwhirled 2 years, 7 months ago

Why would the Democrats make additional sacrifices for the poor and middle class when the wealthy have yet to make a single meaningful sacrifice to save our economy in this time of trouble.

Have you noticed that American Corporations (our wealthiest "people") are sitting on huge piles of cash? They could be using this to hire people and put America back to work, but instead they are sitting on the sidelines waiting for someone else to fix the problem.

If they won't help us to fix the economy and provide for the common welfare, we should simply tax the funds, then take them and use them to put people back to work. A modern day CCC project.

This is one of the ways we got out of the great depression. The other way was through massive government borrowing and the hiring of 10,000,000 Americans to serve in the war effort.

I'd rather we borrow to build the infrastructure of tomorrow, than ammunition, bombs, warplanes, etc. The infrastructure will pay back for generations.

The problem with the economy is that the stimulus was too small, but I don't have to say that, we are all going to find out the hard way as the US slips further and further into the second great correction. See you in 10 years when we are in this same (or worse) place.


George Lippencott 2 years, 7 months ago

I support taxing the rich and agree with you that such a revenue increase should be on the table. So should the standard deduction.

When the Dems put a package a kin to what Mr Ryan did then we can negotiate. Now I don't agree with Mr. Ryan but there is no other option except "tax the rich" whatever thta means. If it is the 3.5% increase Mr. Obama touts it will raise $70B per year. We need close to a trillion to stop the dept from growing!!!!!!

I see a Democratic party avoidance of the pain that needs to be addressed by throwing rocks at the republicans. How about we trade bigger cuts in Democratic Party Entitlement Programs for tax increases, Maybe we can put AmeircaCorp (SP) on the table? How about never ending welfare. How about SSI for people not really handicapped. I can go on.

Your argumnet is very one sided and is a repeat of talking points that are growing older by the day. How about the argumne that we are taxed at the lowest level since 1950 - a canard if I ever saw one.

Compromise starts with agreed upon facts.


nschwerm 2 years, 7 months ago

The ol' reverse psychology trick. Well played Obama.


tange 2 years, 7 months ago

At that core of that gilded existence of the self-satisfied and self-serving wealthy lies a poverty which simply cannot be self-alleviated.


afred 2 years, 7 months ago

None of the right wingers on here will acknowledge the GOP hypocrisy because the cognitive dissonance would melt their hive brain.

This could cause a chain reaction, travelling up their umbilical cords to Faux News headquarters and cause a complete and total meltdown of the right wing media machine.

Without an ubiquitous megaphone perpetuating the right wing ideology through a constant stream of slanted half truths and outright propaganda, the inflated echo chambers that house a significant population of gullible U.S. citizens would very likely collapse.

Forced to find their own voice, they would inevitably start voting for policies that actually benefit themselves, rather than the billionaire "business friendly" benefactors that have been supporting and enabling their NeoCon addiction for the last 40 years.

And then, of course, said billionaire benefactors would likely have their taxes raised, and would thus make fewer billions than they currently are.

Let me repeat that. Fewer. Billions.

Could you imagine?!?! This would be a tragedy of epic proportions. Tragic times 10 to the 10th power (i.e. times 10 Billion).

And that is why none of the right wingers on here will acknowledge the GOP hypocrisy.


George Lippencott 2 years, 7 months ago

Now let me understand this

The SS trust fund full of boinds and not dollars. We see a massive impact on the general fund to pay back the bonds. Now we want to continue a policy of not paying into the fund the legal contribution so the pay back will be even larger. And somehow the Tea party is a problem??

Sounds to me like the Repubs have it right. Pay what is owed into SS. The Dem seem to want to move more of the costs of SS to the general fund (where most of it will be soon) so that the progressive tax system (except for the rich) will absolve the bottom half of the population of contributing to SS in full measure? More wealth redistribution from the middle to the so called "poor".

Endless Democratic mantra "tax the rich" but when the rubber meets the road they tax the middle. Wow!


Richard Heckler 2 years, 7 months ago

Most all elected officials do not know how to grow an economy which is evident in the no new industry, no new jobs and no new economic growth policy the repubs represent.

KILL the Bush tax cuts across the board completely.

The repub zero economic growth and crime spree background looks something like this:

Ahh yes the lovely repub history that repub candidates never discuss yet repeats itself no matter what which does include Nixon's Watergate and Reagan/Bush secret weapons deal working with Iran as a partner can we say Iran Contra.

Introducing the colorful RINO Plaftorm Written In Stone:

The RINO party has a long history of economic destruction and crime to include Iran-Contra and Watergate. Like or not a consistent and disturbing pattern has developed by their choosing.

STOP electing RINO’s ! My My father in law left the RINO party because he is a fiscal conservative republican with at least 50 years under his belt. Evermore stunning he is working with the democrat party in Pennsylvania.

After spending so so many decades in Washington D.C on tax dollar payrolls RINO’s are sure they learned all they needed to know about OUR money and founding reckless economies. RINO’s have much reckless economics experience under their belts that they never quit sharing.

Introducing the RINO Plaftorm Written In Stone:

  1. TABOR is Coming by Grover Norquist and Koch Bros sells out state governments

  2. The Reagan/Bush Savings and Loan Heist(Cost taxpayers $1.4 trillion)

  3. Wall Street Bank Fraud on Consumers under Bush/Cheney sent the economy out the window costing taxpayers many many $$$ trillions and millions of jobs.

  4. ONLY 3 financial institutions instead of several were at risk so why $700 billion in bail out money?

Tax cuts which do nothing to make an economy strong or produce jobs.

  1. Still A Bad Idea – Bush Tax Cuts - The ENTITLEMENT program for the wealthy at the expense of the middle class

In the end big debt and super duper bailouts were the results which does not seem to bother Republicans, as long as they are in power.

In fact, by the time the second Bush left office, the national debt had grown to $12.1 trillion:

  • Over half of that amount had been created by Bush’s tax cuts for the very wealthy.

  • Another 30% of the national debt had been created by the tax cuts for the wealthy under Presidents Reagan and George H.W. Bush.

• Fully 81% of the national debt was created by just these three Republican Presidents.


usnsnp 2 years, 7 months ago

All tax exemptions and subsidies should be looked at. Each should be judged on their merits and not on how much the people or buisness donate to the politicians. As for free speach, there is nothing wrong with it, except when you only tell the part that favors you or you call people names because they do not agree with you. Has anybody head the saying, lying by obmision in the legal system you can go to jail for doing this. Free speach also means being responsible for what you say, and if someone catches you in a mistake, owning up to it not calling people names.


RidgeRunner 2 years, 7 months ago

SO, the GOP is going after the working class, especially contract workers whose taxes are not matched my the employer, instead of the employer.?



beatrice 2 years, 7 months ago

Notice how all the usual Republican party supporters are completely -- and I mean completely! -- avoiding the specifics of this story.

Republicans are appearing to be in favor of allowing a tax cut to expire that would have the greatest impact on the middle and working classes. Why would this possibly be a good thing if the same isn't true for the wealthy? Instead of answering this, we get people calling Michelle Obama degrading names and the typical hysteria. Sad.


jayhawklawrence 2 years, 7 months ago

I think it is time to close down Congress and start over with a completely new group and a completely different attitude.


jayhawklawrence 2 years, 7 months ago

I used to think the Republican Party was smart, but then they started giving us Presidential candidates like Bush, Palin, Backmann, Perry, McCain...

Whatever happened to all the smart guys.

Look at Liimbaugh, Beck, Hannity and Rove,

Not a one with a college degree.


Centerville 2 years, 7 months ago

5% off this year's spending is a good start. No one is complaining about that. Let's just see if the Executive Office submits such a thing...and who draws the straw to tell Moochelle.


rockchalk1977 2 years, 7 months ago

White House orders agencies to cut their budgets. "White House budget chief Jacob Lew has ordered agency heads to submit spending plans for the upcoming budget at least 5 percent below this year's levels. He also wants them to propose ways to trim a total of at least 10 percent of their spending."

President Downgrade makes draconian cuts while vacationing for 10 days at a ultra exclusive 28-acre Martha's Vineyard compound called Blue Heron Farm. Let them eat cake!


Centerville 2 years, 7 months ago

Just like the feds stuck the Post Office with an unsupportable pension obligation, so the feds have stuck Social Security Retirement with an unsupportable disability benefit system that has become the next stop after unemployment compensation runs out.

It's the insane spending that is tucked into otherwise worthwhile endeavors. Very clever. Designed for collapse.


rockchalk1977 2 years, 7 months ago

Survey: More economists prefer cuts over taxes. "The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases."

We have a spending problem!


Cait McKnelly 2 years, 7 months ago

This article isn't about the income tax, tbaker. It's about FICA and Social Security contributions. Which is one of the things I find puzzling about the Republican objection to it; employers won't be and haven't been paying anymore in contributions than what they already are and have been all along. So why do they object?


tbaker 2 years, 7 months ago

Abolish the income tax. Pass the FairTax.


concerned_citizen1961 2 years, 7 months ago

Republicans, including very sharp economists like Ben Stein are facing a cold, hard reality that some more taxation---in some shape, form or fashion----is now practically unavoidable due to the Pelosi/Reid/Obama spending orgy. This is something any rational person can see and accept. It will take some time and money to fix the wrecked economy; wrecked by the afore mentioned and their ilk. Most can take that, but they can not take seeing their stocks/401k's etc getting wiped out.


Centerville 2 years, 7 months ago

We need to decide whether Social Security is to be a welfare plan or a supplemental retirement plan. If we opt for the latter, then payouts should continue to be commensurate with contributions. Lower contributions - lower payout. Simple.


just_another_bozo_on_this_bus 2 years, 7 months ago

So Republicans are hypocrites. Whoodathunkit? But hypocrisy is required to carry out class warfare.


Liberty_One 2 years, 7 months ago

Uh-huh. So let's not hear any more about how republicans are for limited government and low taxes because they really aren't.


Flap Doodle 2 years, 7 months ago

Dear Leader's found a tax hike he doesn't like? Inconceivable!


Gandalf 2 years, 7 months ago

Dead on cait repubs have neer been shy about taxes, only who has to pay them. Tax the poor, but leave my rich buddies alone.


Cait McKnelly 2 years, 7 months ago

Of course the GOP wants to keep taxing the "little guy". Those 47% who are sooooo oppressive to the wealthy just can't be allowed to continue being such big meanies. That just doesn't jibe with the Republican "up is down" universe.


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