The White House makes the case for the tax break.
WASHINGTON--Sen. Dick Durbin (D-Ill.) and Sen. Mark Kirk (R-Ill.) are at odds over whether a temporary paycheck tax cut due to expire at the end of the year -a break on Social Security payroll taxes--should be extended: Durbin is for continuing the break and Kirk is against it.
Congress is headed to a showdown on the issue. President Barack Obama is pushing for what was originally a one-year break to be continued.
The House, with GOP votes on Tuesday passed a measure to continue the Social Security payroll tax cuts--but only by packaging it with a mandate to build the controversial Keystone Canada-to-Texas pipeline. Senate Democrats are likely to reject the House linkage and Obama has threatened a veto.
Kirk, during a C-SPAN interview on Sunday said he is against using "Social Security as a cash cow for an economic stimulus." He is prepared to let the cuts expire because he does not want the U.S. to issue more debt to replace cash in the Social Security Trust Fund that was lost when folks in 2011 were able to pay less into it.
KEYSTONE: Kirk and Durbin are also potentially split over Keystone. Kirk is for construction of the pipeline because it will produce jobs. Durbin is against Keystone being included in a Social Security payroll tax bill. He backs Obama's position that a review of the pipeline is necessary--and will wait to see what that review concludes.
Everyone who gets a paycheck got to keep more of their own money in 2011 due to Social Security payroll tax cuts Obama pushed through. Those breaks expire at the end of December. Obama earlier this year proposed continuing the paycheck tax cuts and giving a break to employers who have to pay taxes for each employee. Now he has a battle just getting Congress to let the breaks live for another year.
Under a bipartisan deal Obama made with Congress in 2010 and starting in 2011, the deduction on your paycheck for Social Security -- often called a payroll tax -- was cut by 2 percent for a year. The rate workers kicked in dropped to 4.2 percent from 6.2 percent. The employers' contribution stayed the same -- 6.2 percent.
What does this mean to you? If you make $106,800 a year, the maximum saving is $2,136. (Social Security taxes are applied to only the first $106,800 of earnings.)
Let's look at it another way: If you make $500 a week, you get a $10 weekly tax cut. If you make $1,000 each week, your break is $20; a $1,500 weekly salary earner pays $30 less in payroll taxes.