Wicker Calls for Extension of Payroll Tax Holiday
Political Gamesmanship from White House Is Derailing Legislative Action
Monday, December 12, 2011
Extending the payroll tax holiday has renewed the debate over taxes and deficit spending in Washington. These cuts were enacted on a bipartisan basis in December of last year, reducing the amount taken from employee paychecks for Social Security from 6.2 percent to 4.2 percent. This enabled Americans to take home more of the money they earn. Extending these cuts in their current form would allow a family earning $50,000 to keep about $1,000 of their income over the next year.
An extension of this policy should be a simple matter, but it has instead turned into a year-end political game of chicken. Both political parties agree that extending the tax holiday should come with offsets in order to replace revenue the cuts will drain from the Social Security trust fund. This can be done easily through modest spending cuts, a freeze in federal pay, reductions in the federal workforce, and means-testing of some benefits at the upper-income levels.
Democrats’ Tax Would Hurt Job Creation
Rather than a simple year-long extension, Senate Democrats have proposed reducing the Social Security taxes even further – to 3.1 percent – and raising taxes on other Americans. Four out of five taxpayers affected under the Democrats’ proposals would be business owners – the very people we should be encouraging to invest and hire.
According to a recent editorial in the Wall Street Journal, about $400 billion of businesses’ income would be subject to the surtax that Senate Majority Leader Harry Reid has proposed to offset the payroll tax cut. Even higher rates will come if the Bush-era tax cuts expire at the end of next year. This job-creating capital should stay in the private economy.
Raising Taxes Is the Wrong Approach
Two years ago, President Obama said, “You don’t raise taxes in a recession.” He now seems to have abandoned that idea. In recent weeks, he and his party have advocated raising taxes in a sluggish economy. Since mid-October, the Senate has on four occasions rejected on a bipartisan basis the President’s attempts to raise taxes.
Unlike the President, Republicans have consistently agreed with the idea that raising taxes is the wrong approach in a tough economy. This means not raising taxes on anyone – the working poor, assembly-line employees, retailers, investors, and job creators alike.
End Political Theatrics
Last week, the White House unveiled a digital clock at the top of its Web site that supposedly counts down to the date when the temporary payroll tax cuts are set to expire at the end of the year. The clock is one example of how Democrats have manufactured a dispute to earn political points in 2012.
Good lawmaking depends on cooperation. We have limited time to act before the end of the year. Last week, I spoke on the Senate floor about the need for constructive action that will not burden Americans with higher rates or add to our deficit. We need to end the political theatrics and act before the end of this year.