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Payroll Tax Deal Likely

February 15, 2012

From SBAM’s national affiliate, NSBA:

Following months of back-and-forth debate over employee payroll tax cuts, the gridlocked Congress appears poised to extend the current two percent cut through the end of the year. Congressional leaders announced a tentative deal last night which also would extend unemployment benefits for another 10 months and once again push back the Medicare “doc fix” that would result in cuts to their payments.
The total cost of the package would be around $150 billion with the $100 billion cost of the payroll tax reduction being added to the deficit and the $50 billion cost of the unemployment benefits and Medicare doc fix being offset by budget cuts elsewhere. Among those pay-fors: requiring federal workers pay more into their pensions ($15 billion); and cutting funds from the Patient Protection and Affordable Care Act (PPACA) for promoting wellness and reducing chronic diseases ($5 billion).

Negotiators also are working to reducing the limit for unemployment benefits from its current 99 weeks. The language in the current deal would allow the term to be dependent on a state’s unemployment rate, but the range is likely to be somewhere between 73 and 79 weeks. The controversial language allowing for drug tests of recipients of unemployment benefits was scrapped along with a requirement that the recipient must enroll in a GED program if they have not finished high school.

The deal has come under fire from many Republicans criticizing the payroll tax cut extension for not being offset. The key negotiators, Sen. Max Baucus (D-Mont.) and Dave Camp (R-Mich.)—the two chairs of the tax-writing committees, along with House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) outlined this deal and have underscored the need for the conference committee to craft a formal proposal, thereby fast tracking it and limiting the amendment process.

Unfortunately, the employer-side of the payroll tax was, and has been, all but ignored during discussions over measures to help consumers and the economy.

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