Another Proposal to Extend the Payroll Tax Cut and Other Policies

Finding a way to extend the payroll tax cut, along with the many other expiring provisions this year, continues to be a dominating issue for Congress as 2011 comes to an end this month. A bipartisan proposal that includes a one-year extension of the tax cut was introduced yesterday by Sen. Susan Collins (R-ME) and Sen. Claire McCaskill (D-MO).

Their proposal (The Bipartisan Jobs Creation Act) includes the payroll tax cut extension among several measures meant to represent a bipartisan compromise on what the Senators call "a commonsense jobs bill".

These measures include:

• Extending the 2 percent payroll tax holiday for employees
• Expanding the payroll tax holiday to employers
• Extending three other expiring tax credits (research and development credit, 100 percent bonus depreciation and 15 year restaurant and retail depreciation)
• Providing a tax credit to American high-tech small businesses less than five years old
• Providing an additional $35 billion for infrastructure spending to states
• Consolidating and reforming federal jobs-training programs

The bill proposes to pay for these measures by enacting a millionaire surtax (two percent on taxpayers with more than $1 million in annual earnings, with an exception for small businesses) and by repealing tax credits offered to major U.S. oil companies. In a joint press release, Sen. McCaskill states:

"There are a lot of folks who think bipartisan compromise in Congress isn’t possible anymore, but I’m not willing to accept that. Here is a prime example of what can be accomplished when Congress stops playing politics, and starts working together—a viable plan to put more Americans back to work, rebuild our crumbling infrastructure, and cut taxes for working Americans."

Given the bitterly partisan atmosphere we've witnessed in Washington recently, seeing lawmakers work together in a bipartisan manner is certainly refreshing, and we applaud Sens. Collins and McCaskill for including measures to pay for any new policies or extensions. The last thing we can afford is making our current fiscal trajectory any more dire.

To read a complete summary of the proposal, click here.