Payroll Tax Cut Is Unlikely to Survive Into Next Year

[dkf]

http://www.nytimes.com/2012/10/01/business/economy/payroll-tax-cut-unlikely-to-survive-into-next-year.html

WASHINGTON — Regardless of who wins the presidential election in November or what compromises Congress strikes in the lame-duck session to keep the economy from automatic tax increases and spending cuts, 160 million American wage earners will probably see their tax bills jump after Jan. 1.

That is when the temporary payroll tax holiday ends. Its expiration means less income in families’ pocketbooks — the tax increase would be about $95 billion in 2013 alone — at a time when the economy is little better than it was when the White House reached a deal on the tax break last year.

Independent analysts say that the expiration of the tax cut could shave as much as a percentage point off economic output in 2013, and cost the economy as many as one million jobs. That is because the typical American family had $1,000 in additional income from the lower tax.

But there is still little desire to make an extension part of the negotiations that are under way to avert the huge tax increases and across-the-board spending cuts, known as the fiscal cliff, that will start in January without a deal. For example, without any action, the Bush-era tax cuts will expire and the military and other domestic spending programs will be reduced.

[taught_me_patience]

1. Expiration going to be a huge drag on the economy

but it has to be done at some point.

[JoePhilly]

2. Obama will be able to let that and the Bush tax cuts expire after the election.

And that's true regardless of the outcome of the election.

[Blue_In_AK]

3. It shouldn't have been cut in the first place. N/t

[Drunken Irishman]

6. If it hadn't, Obama would probably be on his way to a landslide loss...

The anemic economic growth would've been even worse without a payroll tax cut that boosted consumer confidence earlier in the year. Obama has been able to stay ahead of Mitt Romney mostly because the economic conditions have not dramatically worsened this year (and in some instances, improved). Had they stalled out last year or earlier this year, we're probably stuck in a recession and Obama is on his way to a Carteresque loss.

[lonestarnot]

4. Whatever. We live on nothing now in comparison to richie rich, what's a little bit less than nothing

[Drunken Irishman]

5. I think it's pretty clear the country is going to go into a recession next year...

No matter who wins. It's going to be tough, but probably only temporary as we adjust to the new burden of tax increases.

[dkf]

8. The CBO is projecting 2 quarters of negative growth if all the parts of the fiscal

Cliff occur.

That might be worth it.

[Drunken Irishman]

18. All I care about is that we get through the election...

We'll bounce back and as you say, the initial damage will be worth it. The narrative will be ugly, but just as long as things bounce back before the 2014 midterms...

[librechik]

7. cutting it endangers Social Security--we don't want our SS fund to continue to shrink

[justgamma]

9. Got a question about Bush tax cuts.

I got a check for $600 from Bush plus $.50 a week. When President Obama passed his tax cuts I got $13 + a week.

When we say Bush tax cuts will expire is it only his and not Obama's? Talking only about Bush tax cuts make it seem to me that those are the only ones we got. How do we frame Obama's tax cuts?

[dkf]

10. Those aren't Bush's tax cuts any more...those expired.

[justgamma]

11. So we're talking about the cuts on the rich? Thanks.

Just want to be clear.

[dkf]

12. Obama extended all the cuts originally under Bush.

Now he wants to extend only the ones under $250,000. But they are all scheduled for expiration.

[julian09]

13. If he gets a Dem House and Senate he can restore them in 2013

and Senate leader Reed does away with filibuster rule, no problem. We have to do our part and give him those majorities.
Down ticket wins are essential to his and our success.

[dkf]

14. No one is fighting to extend the payroll tax holiday though.

Doesn't matter who wins.

[SickOfTheOnePct]

17. No, not just tax cuts on the rich

If all of the tax cuts are allowed to expire, everyone that pays federal income tax will pay more. For example, a married couple filing jointly with $50,000 in taxable income (not AGI, taxable), would pay $6650 in federal income tax under current law, and $8299 if the tax cuts expire, or roughly $32/week more.

Not saying they shouldn't all expire, but it will affect everyone, not just the rich.

[Johonny]

15. maybe with record corporate profits... they could just raise our salaries?

[dkf]

16. Record unemployment = no upward wage pressure.