Two Senators Release Bipartisan Payroll Tax Plan

A pair of senators — one Democrat and one Republican — release a payroll tax plan they believe can find bipartisan support. It pays for the tax cut with a tax on millionaires, but it exempts those millionaires who actually are small business owners who create jobs.

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For the past year, a payroll tax break has, on average, put an extra $1,000 in the pockets of working families, but it will expire at the end of the month unless Congress acts. Democrats are for renewing it, even making it bigger to spur the economy. Republicans don't want to be accused of raising taxes and many of them are reluctantly getting onboard.

But, as NPR's David Welna reports, the latest proposals for a deal are still running into stiff resistance from the right.

DAVID WELNA, BYLINE: Last week, rival GOP and Democratic plans to extend the payroll tax cut both failed to get enough votes in the Senate to move forward. So this week, Senate Democrats rolled out a new proposal. It would no longer expand the cut to benefit employers as well, but it would reduce the Social Security withholding for employees by another percentage point. At the same time, it would lower a proposed surtax on income above $1 million meant to pay for the tax break from three and a half percent to 1.9 percent.

Democratic leader Harry Reid declared it a plan Republicans dismiss at their peril.

SENATOR HARRY REID: Like our previous proposal, it won't add a penny to the deficit. It will be fully paid for with a mixture of spending cuts Republicans have already agreed to and a tiny, tiny surtax on the top two-tenths of one percent of American taxpayers.

WELNA: But no new cracks have appeared in what's been a Republican wall of opposition. This morning, Senate GOP leader Mitch McConnell swatted down the Democratic proposal, calling it a terrible idea.

SENATOR MITCH MCCONNELL: This was not a compromise. This was nothing more than another bill designed to fail so Democrats can have another week of fun and games on the Senate floor while tens of millions of working Americans go another week wondering whether they're going to see a smaller paycheck at the end of the year.

WELNA: Two hours later came another proposal to extend the payroll tax cut. This time, it was bipartisan, sponsored by Missouri Democrat Clair McCaskill and Maine's Susan Collins, the only Republican who voted for the Democratic plan put forward last week. Like that plan, Collins said this one targets the wealthy to offset the cost of the payroll tax cut.

SENATOR SUSAN COLLINS: Our bipartisan plan is fully paid for with a two percent surtax on those who earn $1 million or more a year, but - and this is critical - with a carve-out to protect small business owner/operators.

WELNA: Collins said she hoped her fellow Republicans would have a change of heart because of the protection her bipartisan plan provides for small businesses. But when leader McConnell was asked about the plan later, he gave it a thumbs down.

MCCONNELL: I am not in favor of raising taxes on working people.

WELNA: Still, McConnell said he does favor extending the payroll tax cut in its current form. He said he expected the solution to come in an end of the year legislative package from the House. But Reid, his Democratic counterpart, said Senate Republicans should be taking the initiative.

REID: Hopefully, the Republicans will come forward with some proposals here. You know, they have been totally silent. As you learned, probably, earlier today, the House isn't going to even try to do anything this week. They've given up.

WELNA: And that, Reid added, is not a good sign. Still, since Congress generally never does anything until it absolutely has to, there's still hope some deal will be reached keeping the payroll tax cut alive next year. David Welna, NPR News, the Capitol.

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