Congress continues to consider payroll tax holiday, unemployment insurance extension

Congress is expected to continue to consider extending the current payroll tax holiday into 2012, including combining it with an extension of unemployment insurance for long term unemployed workers.  Social Security payroll taxes paid by employees and employers provide dedicated funding for the Social Security Trust Funds.  To stimulate the economy, for 2011 Congress reduced the payroll tax paid by employees by 2 percent, from 6.2 to 4.2 percent of payroll (on up to $106,800 of earnings). Congress also directed general revenues into the Social Security Trust Funds to cover the 1-year reduction in payroll tax revenues.  This payroll tax holiday will expire on December 30, 2011.  Last week, two bills to extend the payroll tax holiday into 2012 failed in the Senate (S. 1917; S. 1931).  This week, the House is expected to take up legislation introduced on December 9th by Rep. Dave Camp (R-MI) that would extend the payroll tax holiday and unemployment insurance.  The bill contains a number of additional provisions related to Medicare, Temporary Assistance to Needy Families (TANF), the Affordable Care Act, Medicaid, the Additional Child Tax Credit, and Social Security.

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