Senate Dems Holding Up Tax Relief for Families in the New Year
The Democrat hyperbole regarding the payroll tax debate has obscured the actual events leading to the current standoff: the GOP-led House is the only body that has passed a comprehensive tax and spending cut package that ensures American families and employers will not see a payroll tax hike for the entirety of the coming year.
The President's allies in the Senate have instead offered a short-term extension of the payroll tax holiday, refusing to confront the expiring tax relief head on. Beyond the poor policymaking represented by short-term fixes, the tax relief the Senate bill ostensibly provides is undermined by the logistical implications of implementing it. As explained in a letter sent to lawmakers from the National Payroll Reporting Consortium:
[M]any payroll systems are not likely to be able to make such a substantial programming change before January or even February. The systems affected tend to be highly complex, normally requiring at least ninety days for a change of this magnitude for software testing alone; not to mention analysis, design, coding and implementation.
What's more, the Senate bill is not a flat extension of the current payroll tax rates, As Senate Majority Leader Harry Reid would have you believe. Phil Kerpen at AFP explains:
Instead, [the Senate bill] creates a two-tiered payroll tax with a rate of 4.2 percent for the first $18,350 of income in those 60 days, with a 6.2 percent rate above that. For the first time, we would have a graduated, progressive system of tiered rates for payroll taxes.
The House, then, in demanding the Senate to negotiate a compromise, is not holding up tax relief for American families - it is preventing the Senate's vision of a tax relief bill from replacing a comprehensive extension of the payroll tax cut. If the Senate Majority Leader truly does not wish to see Americans families' payroll taxes rise in the new year, he should appoint conferees to get the job done.