Lawmaker: Tax plan ‘is unfair’

WASHINGTON (AP) — Any rebate included in an economic stimulus plan should include people who pay Social Security taxes, not just those who pay income taxes, a leading Democratic lawmaker said Sunday.

“If we did the rebate based on the payroll tax, it would hit a lot more people at a lower end of the spectrum. And so to just say income taxes are the only taxes we’re considering that people pay is unfair,” said Charles Schumer, the New York lawmaker who is chairman of the congressional Joint Economic Committee. People making $35,000 to $50,000 pay a lot of federal taxes, he said, but much of that is not income tax, but directed to programs like Social Security.

Democrats and the Bush administration say they want to reach a quick agreement so the economic stimulus can be applied quickly to the struggling economy. But any Democratic insistence on covering those who don’t pay income tax could be a cause of conflict.

The White House, for now, envisions providing one-time rebate checks to people who pay federal income taxes. That would leave out millions of the working poor, who do not make enough to pay income taxes but do pay Social Security and Medicare payroll taxes.

Families of four earning less than $24,900 a year would not get a rebate under the White House approach, said Chad Stone, chief economist at the Center on Budget and Policy Priorities.

He has estimated that about 22 million households file income tax returns but do not pay that tax because their earnings are so low.

Treasury Secretary Henry Paulson has said Bush “is focused on broad-based tax relief for those who are paying taxes.” Paulson said that worked in 2001 and 2003.

The centerpiece of an economic aid plan should be a tax cut for the middle class, and the overall proposal could include relief for business and spending incentives for the unemployed, Schumer said.