In the ongoing battle over extending the payroll tax cuts that currently save the median American household about $1,000 a year, one salient point is commonly overlooked: The proposal that the Obama Administration and Congressional Democrats are championing also cuts in half the payroll tax for employers. Currently, employers are subjected to a payroll tax of 6.2 percent on every paycheck they write. The Democratic proposal would reduce that to 3.1 percent on the first $5 million in taxable payroll – that is, it would chiefly benefit small and middle-sized businesses.
Yet every Senate Republican but one (Maine’s Susan Collins) voted against this proposal when it came to a vote on Thursday, complaining that it taxed job-creators by proposing to offset the tax cut by raising taxes on individuals and couples for that portion of their annual income in excess of $1 million. Never mind that that the Treasury Department has concluded that only 1 percent of those taxpayers are small businesses. Never mind that 100 percent of the employers who would benefit from the Democrats’ proposal are businesses with employees on their payrolls.
The Republicans own, belated proposal to lower payroll taxes does not reduce the 6.2 percent tax on employers at all, nor does it reduce the payroll tax on employees as much as the Democrats’ does. (The Democrats propose further reducing the employees’ tax from its current 4.2 percent to 3.1 percent, while the Republicans call for retaining it at its current rate of 4.2.) So which party wants to help job creators? And which party is only interested in helping millionaires?
P.S. While on a Thanksgiving-break vacation in Los Angeles last week, I came across a story detailing how a murder suspect who allegedly hired three men to kill a business rival then hired a fourth man to kill the three he had previously hired. Now, there’s a job creator!