(Host) Both of Vermont’s U.S. senators say extending and expanding a payroll tax cut is a good way to help stimulate the national economy.
VPR’s Bob Kinzel reports:
(Kinzel) Here’s the issue facing Congress. The current payroll tax holiday is set to expire at the end of December. Usually this tax rate is 6.2 percent for most individuals but a short term reduction dropped the rate to 4.2 percent. Without any action, it will return to the higher level on January 1.
Many Senate Democrats are backing a bill that would extend and expand the payroll tax cut. Under their proposal, the rate would fall to 3.1 percent and the bill also cuts payroll taxes for employers.
Senator Patrick Leahy says the plan will put an additional $1,500 in the hands of the average Vermont family:
(Leahy)"We saw what happened and we saw the stock market shoot up after the consumer buying during the past weekend, that consumer buying is not from the wealthiest 1 percent of the country it’s from the average person. Put more money in their pocket the economy will stimulate more, will create more jobs, all of us will benefit from it."
(Kinzel) The bill is paid for by imposing a 3 % tax surcharge on people with incomes above a million dollars. Senate Republican leaders say this tax will hurt economic growth. Leahy doesn’t agree.
(Leahy)"The wealthy people in this country are making more money now than they ever have in the history of the nation and that money sits in banks, and stocks, and off shore investments. None of it is translating into jobs."
(Kinzel) Senator Bernie Sanders says he’s ambivalent about the tax plan. On one hand, he strongly supports the idea of a tax reduction:
(Sanders) "It is good that in the midst of a recession we provide tax relief to the middle class and working families. We need that absolutely."
(Kinzel) But Sanders says the payroll tax is the prime funding source for the Social Security Trust Fund. That’s why he’s concerned about a plan to use General Fund revenues to replace money from the payroll tax:
(Sanders)"Then it makes it easier for those politicians who are not particularly sympathetic to Social Security to say hey it’s just another government program let’s cut it. We have a 15 trillion dollar debt we just cannot afford to put more and more government money into Social Security."
(Kinzel) Sanders says he’s actively talking with the White House about ways to protect the Social Security Trust Fund in the future. A Senate vote on the payroll tax plan is expected sometime this week.
For VPR News I’m Bob Kinzel in Montpelier.