“How could it be that the only time there’s a catch is when it comes to raising taxes on middle-class families?”he said in the White House briefing room. “How can you fight tooth and nail to protect high-end tax breaks for the wealthiest Americans and yet barely lift a finger to prevent taxes going up for 160 million Americans who really need the help? It doesn’t make sense.”
The president has made extending and expanding the tax holiday the centerpiece of his $447 billion jobs plan, proposing that employees pay only 3.1 percent in payroll tax next year — resulting in a $1,500 tax break for the average family. He also suggested that some expanding businesses should receive a 2 percent cut in their payroll taxes.
President Obama says Congress needs to extend a payroll tax cut that will expire at the end of the year. The White House says taxes on the average family would increase by $1,000 if the cuts are not extended. (Dec. 5)
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Only one Republican — Sen. Susan Collins (Maine) — voted with Democrats on a Senate bill last week that mirrored Obama’s proposal and would pay for it with a new 3.25 percent tax on annual income over $1 million.
The latest Senate version, offered by Sen. Robert P. Casey Jr. (D-Pa.) would no longer provide a tax cut to employers. It would pare down the surtax on income over $1 million from 3.25 percent to 1.9 percent and make the surtax temporary, expiring after 10 years.
It also would adopt deficit-reducing measures from the recent deficit-reduction negotiations, Casey said, raising $38.1 billion by increasing fees that Fannie Mae and Freddie Mac charge mortgage lenders.
But the inclusion of the tax on millionaires probably will kill any chance of passage, and is considered a sign that Democrats are pressing their political advantage by forcing another difficult vote on Republicans.
Ultimately, both sides have said they think a negotiated compromise between Democrats and Republicans in the House and the Senate will be necessary to find a tax holiday solution that is acceptable to both parties.
“If the president wants to make progress, he should insist that Senate Democrats remove the job-killing small-business tax hike from their partisan proposal,” said Michael Steel, a spokesman for House Speaker John A. Boehner (R-Ohio).
Boehner has floated the idea of attaching to the payroll extension other conservative proposals, such as a bill that would mandate a speedy decision from the State Department on a proposed energy pipeline from Canada to the Gulf Coast.
Staff writers William Branigin and Felicia Sonmez contributed to this report.