This week, the United States Senate will be voting on a proposal to expand and extend a payroll tax holiday. The plan (authored by Democrat Bob Casey of Pennsylvania) would extend the 2011 payroll tax holiday by one year, and expand it from 2 percentage points to 3.1 percentage points of payroll (half the worker "share" of Social Security taxes).
Unfortunately, the bill is paired with a permanent, jobs-killing tax hike. It would impose a permanent 3.5 percentage point "surtax" on adjusted gross income in excess of $1 million. According to a study by Congress' own non-partisan Joint Committee on Taxation, this tax hike will fall directly on 34 percent of all the profits earned by small businesses in America.
In other words, the Casey bill permanantly raises taxes on employers in order to continue (or slightly expand) for only one year a tax cut for employees. Over time, that's a large net tax increase and a jobs-killer.
ATR is opposed to the Casey tax bill for this reason. Support for the Casey bill would be a violation of the Taxpayer Protection Pledge, since it is a long-term tax hike and imposes a higher marginal income tax rate on small employers.
Ideally, an extension of the payroll tax holiday should be paired with a spending cut of equal or greater size.