Social Security payroll taxes apply only to the first $106,800 of a worker's wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.
The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.
The 12-month tax reduction will cost the government about $120 billion this year, and a similar amount next year if it's renewed.
That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, "no matter how well-intended," will push the deficit higher, making the panel's task that much harder, Camp's office said.
But Republican lawmakers haven't always worried about tax cuts increasing the deficit. They led the fight to extend the life of a much bigger tax break: the major 2001 income tax reduction enacted under Bush. It was scheduled to expire at the start of this year. Obama campaigned on a pledge to end the tax break only for the richest Americans, but solid GOP opposition forced him to back down.
Many Republicans are adamant about not raising taxes but largely silent on what it would mean to let the payroll tax break expire.
Republicans cite key differences between the two "temporary" taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it's better to reduce income tax rates for people and for companies than to extend the payroll tax break.
The Associated Press: GOP may OK tax increase that Obama hopes to block
The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.
The 12-month tax reduction will cost the government about $120 billion this year, and a similar amount next year if it's renewed.
That worries Rep. David Camp, R-Mich., chairman of the tax-writing Ways and Means Committee, and a member of the House-Senate supercommittee tasked with finding new deficit cuts. Tax reductions, "no matter how well-intended," will push the deficit higher, making the panel's task that much harder, Camp's office said.
But Republican lawmakers haven't always worried about tax cuts increasing the deficit. They led the fight to extend the life of a much bigger tax break: the major 2001 income tax reduction enacted under Bush. It was scheduled to expire at the start of this year. Obama campaigned on a pledge to end the tax break only for the richest Americans, but solid GOP opposition forced him to back down.
Many Republicans are adamant about not raising taxes but largely silent on what it would mean to let the payroll tax break expire.
Republicans cite key differences between the two "temporary" taxes, starting with the fact that the Bush measure had a 10-year life from the start. To stimulate job growth, these lawmakers say, it's better to reduce income tax rates for people and for companies than to extend the payroll tax break.
The Associated Press: GOP may OK tax increase that Obama hopes to block
