The payroll tax debate is the last fight President Barack Obama has to endure before 2011 ends.
Unfortunately the Prez is having a hard time trying to convince his boy Republican House speaker John Boehner to extend the payroll tax cut and jobless benefits for millions of Americans.
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But what exactly is the Payroll Tax? For those who aren’t in the political circles of Washington, it actually affects all
Americans who collect a check.
Late last year, Obama and Congress struck a deal to reduce the Social Security payroll tax from 6.2 percent to 4.2 percent in 2011. This means that working Americans who collect a check paid 4.2 percent of Social Security payroll tax.
Now, President Obama and leaders of both parties want to extend the tax cuts and jobless benefits and other reimbursements for an entire year.
On Tuesday, the Republican led House moved to reject a Senate plan to extend the payroll tax cut for two months.
House Republicans want to extend the payroll tax cut for all of 2012, but also want to slash other spending to help pay for the tax break, which the Democrats don’t want.
So for the non-insiders here’s a quick breakdown about the current payroll tax fight in Washington.
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The Breakdown!
To simplify the madness. If you collect a check every two weeks and made $40,000 a year, in 2010 you paid $2,480 as a result of the payroll tax. In 2011, you paid $1,680, saving $800 from the previous year.
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Act Now!
No one wants to pay higher taxes, so if Congress doesn’t act by extending the payroll tax before it expires, it will go back up to 6.2 percent.
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The Fight Goes On!
House Republicans want to extend the payroll tax cut for all of 2012, but also want to slash other spending to help pay for the tax break, which the Democrats don’t want.
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Now What?
Americans will pay higher taxes if a deal isn’t struck soon, both sides have to go back to the table and negotiate. They have until the end of December to come to a solution, otherwise, the payroll tax will go back up to 6.2 percent.
