Will GOP OK tax increase?

Associated Press

WASHINGTON

News flash: Congressional Republicans want to raise your taxes.

Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?

Apparently not.

Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income-tax cuts from expiring on schedule are now saying a different “temporary” tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax-break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a “payroll tax” on practically every dime they earn.

There are other differences as well, and Republicans say their stand is consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.

“It’s always a net positive to let taxpayers keep more of what they earn,” says Rep. Jeb Hensarling, “but not all tax relief is created equal for the purposes of helping to get the economy moving again.”

The debate is likely to boil up in coming weeks as a special bipartisan committee seeks big deficit reductions and weighs which tax cuts are sacrosanct.

At issue is a tax that the vast majority of workers pay, but many don’t recognize because they don’t read, or don’t understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama’s request to reduce the workers’ share to 4.2 percent for one year; employers’ rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent Jan. 1.

Obama cited the payroll tax in his weekend radio and Internet address Saturday, when he urged Congress to work together on measures that help the economy and create jobs. “There are things we can do right now that will mean more customers for businesses and more jobs across the country. We can cut payroll taxes again, so families have an extra $1,000 to spend,” he said.

Social Security payroll taxes apply only to the first $106,800 of a worker’s wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.