Democrats Propose to Extend, Expand Payroll Tax Cut; Republicans Scoff

Senate Democrats on Monday urged Congress to extend and expand the tax cuts now in place for employers and employees, but Republicans countered that the tax holiday should end because it isn’t creating jobs or stimulating the economy.

Democratic Sens. Harry Reid of Nevada, Charles Schumer of New York and Bob Casey of Pennsylvania unveiled the legislation in a media call, saying that it would stop the tax hike from hitting middle-class families when it expires at the end of December.

Under the legislation, proposed by Casey, the 2% payroll tax cut for employees would be expanded to a 3.1% break for one year. The legislation would also cut in half, to 3.1% from 6.2%, the employer-side Social Security payroll taxes. According to Senate Majority Leader Reid, the employer cut would not harm the Social Security Trust Fund.

“The payroll tax cut saved the average middle-class family over $1,000 last year,” said Reid (left). “Sen. Casey’s bill would save the average family about $1,500 in taxes next year and save businesses as well.”

However, Republicans are hesitant to extend the payroll tax holiday because they question its value for either job creation or economic stimulus.

“The payroll tax holiday has not stimulated job creation,” said Republican Sen. Jon Kyl of Arizona while on “Fox News Sunday.” “We don’t think that’s a good way to do it.”