For Some in G.O.P., a Tax Cut Not Worth Embracing
By JENNIFER STEINHAUER
WASHINGTON — It is hard to find a tax cut that Congressional Republicans dislike. Unless it is a tax cut pushed by President Obama.
In a turning of the tax policy tables, Democrats are increasingly hammering on Republicans who oppose the president’s proposal to extend for a year a payroll tax cut passed last year with bipartisan support.
That tax cut — which reduces workers’ contributions to Social Security this year to 4.2 percent of wages, from 6.2 percent — expires in December. The White House would like to extend it for another year. But Republicans in Congress are balking, arguing that such a cut adds needlessly to the nation’s budget deficit, and should be replaced with an overhaul of tax policy instead.
“All tax relief is not created equal,” said Brad Dayspring, a spokesman for Representative Eric Cantor of Virginia, the House majority leader. “If the goal is job creation, Leader Cantor has long believed that there are better ways to grow the economy and create jobs than temporary payroll tax relief.”
After battles over the debt ceiling and tax policy, in which Republicans asserted that they would abide no tax increase, Democrats are equal parts incensed by this nuanced policy position and pleased with the opportunity to bang the other party over the head with it.
“One way or another, there will be a vote on extending these tax cuts,” said Senator Charles E. Schumer of New York, the third-ranking Senate Democrat, “and Republicans will have to stand up to the fact if they oppose it they are for tax cuts for the rich but not for the middle class.”
Lower- and middle-income workers are the greatest beneficiaries of the tax cut. The cut resulted in $67.2 billion of lost revenue for Social Security in 2011 and a total cost of $111.7 billion spread over 10 years. The rate will return to previous levels on Jan. 1 if Congress does not extend the cut.
Mr. Obama, whose administration is also mulling a similar tax cut for employers, has repeatedly cited the payroll tax as a cornerstone of his economic agenda “We can cut payroll taxes again,” he said last weekend in his weekly public address, “so families have an extra $1,000 to spend.”
The Republican candidates for president, all of whom have taken strong antitax positions, are eager not to be jammed on the issue. “I think the payroll tax cut is a good thing,” Jon M. Huntsman Jr., the former Utah governor, said in an interview with PBS on Thursday morning. “It helps a whole lot of people,” he added, saying he “would consider extending it.”
Mitt Romney, the former governor of Massachusetts, last year wrote in an opinion article for USA Today that the payroll tax cut “will add to the deficit.” But in a recent interview with Fox TV, he softened that, saying, “I’m all in favor of keeping taxes down and keeping burdens down on American businesses and employers.”
While the tax cut is almost certain to become a bargaining chip this year among the members of a special Congressional committee charged with reducing the deficit by up to $1.5 trillion, Mr. Schumer said the Senate might vote on the matter, forcing Republicans to choose whether to vote against lower taxes.
A spokesman for Grover Norquist, who as leader of Americans for Tax Reform is the author of a no-tax-increase pledge that scores of Congressional Republicans have signed, expressed ambivalence about the cut.
“One could argue that therefore allowing it to lapse was not a tax hike,” said John Kartch, a spokesman for the group. “But safer to either continue the lower rate or cut some other tax rate by the same total amount so that any change was revenue neutral.”
Democrats note that Republicans had no problem extending the so-called Bush tax cuts of 2001, even though those cuts were also originally designated as temporary.
“This seems to be one of those situations where, since Obama says yes, we say no,” Representative Chris Van Hollen, a Democrat from Maryland who is a member of the special committee, said of Republicans. “It doesn’t make sense in any other context.”
Economists are divided about the payroll tax cut extension. Some liberals fear that using general fund money to cover the lost revenue for Social Security puts the program at risk of turning into a welfare-like program rather than an entitlement program supported by payroll taxes.
Others believe, however, that the tax is simply regressive.
Republicans argue that the tax cut robs Social Security of money without providing job growth or other benefits of a broader tax policy overhaul.
“Clearly it puts money in people’s pockets, and that’s good,” said Sage Eastman, a spokesman for Representative Dave Camp of Michigan, a Republican member of the special committee. “But it doesn’t have impact on growing the economy and creating jobs, and that’s what our tax policy reform ought to be focused on.”
In a turning of the tax policy tables, Democrats are increasingly hammering on Republicans who oppose the president’s proposal to extend for a year a payroll tax cut passed last year with bipartisan support.
That tax cut — which reduces workers’ contributions to Social Security this year to 4.2 percent of wages, from 6.2 percent — expires in December. The White House would like to extend it for another year. But Republicans in Congress are balking, arguing that such a cut adds needlessly to the nation’s budget deficit, and should be replaced with an overhaul of tax policy instead.
“All tax relief is not created equal,” said Brad Dayspring, a spokesman for Representative Eric Cantor of Virginia, the House majority leader. “If the goal is job creation, Leader Cantor has long believed that there are better ways to grow the economy and create jobs than temporary payroll tax relief.”
After battles over the debt ceiling and tax policy, in which Republicans asserted that they would abide no tax increase, Democrats are equal parts incensed by this nuanced policy position and pleased with the opportunity to bang the other party over the head with it.
“One way or another, there will be a vote on extending these tax cuts,” said Senator Charles E. Schumer of New York, the third-ranking Senate Democrat, “and Republicans will have to stand up to the fact if they oppose it they are for tax cuts for the rich but not for the middle class.”
Lower- and middle-income workers are the greatest beneficiaries of the tax cut. The cut resulted in $67.2 billion of lost revenue for Social Security in 2011 and a total cost of $111.7 billion spread over 10 years. The rate will return to previous levels on Jan. 1 if Congress does not extend the cut.
Mr. Obama, whose administration is also mulling a similar tax cut for employers, has repeatedly cited the payroll tax as a cornerstone of his economic agenda “We can cut payroll taxes again,” he said last weekend in his weekly public address, “so families have an extra $1,000 to spend.”
The Republican candidates for president, all of whom have taken strong antitax positions, are eager not to be jammed on the issue. “I think the payroll tax cut is a good thing,” Jon M. Huntsman Jr., the former Utah governor, said in an interview with PBS on Thursday morning. “It helps a whole lot of people,” he added, saying he “would consider extending it.”
Mitt Romney, the former governor of Massachusetts, last year wrote in an opinion article for USA Today that the payroll tax cut “will add to the deficit.” But in a recent interview with Fox TV, he softened that, saying, “I’m all in favor of keeping taxes down and keeping burdens down on American businesses and employers.”
While the tax cut is almost certain to become a bargaining chip this year among the members of a special Congressional committee charged with reducing the deficit by up to $1.5 trillion, Mr. Schumer said the Senate might vote on the matter, forcing Republicans to choose whether to vote against lower taxes.
A spokesman for Grover Norquist, who as leader of Americans for Tax Reform is the author of a no-tax-increase pledge that scores of Congressional Republicans have signed, expressed ambivalence about the cut.
“One could argue that therefore allowing it to lapse was not a tax hike,” said John Kartch, a spokesman for the group. “But safer to either continue the lower rate or cut some other tax rate by the same total amount so that any change was revenue neutral.”
Democrats note that Republicans had no problem extending the so-called Bush tax cuts of 2001, even though those cuts were also originally designated as temporary.
“This seems to be one of those situations where, since Obama says yes, we say no,” Representative Chris Van Hollen, a Democrat from Maryland who is a member of the special committee, said of Republicans. “It doesn’t make sense in any other context.”
Economists are divided about the payroll tax cut extension. Some liberals fear that using general fund money to cover the lost revenue for Social Security puts the program at risk of turning into a welfare-like program rather than an entitlement program supported by payroll taxes.
Others believe, however, that the tax is simply regressive.
Republicans argue that the tax cut robs Social Security of money without providing job growth or other benefits of a broader tax policy overhaul.
“Clearly it puts money in people’s pockets, and that’s good,” said Sage Eastman, a spokesman for Representative Dave Camp of Michigan, a Republican member of the special committee. “But it doesn’t have impact on growing the economy and creating jobs, and that’s what our tax policy reform ought to be focused on.”
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