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White House considers new tax cut
The Obama administration is looking for an alternative tax break to stimulate the U.S. economy after payroll tax cuts expire at the end of 2012, officials said.
The tax break would be designed to provide about the same amount of relief — $400 for individuals per year and $800 for married couples — that was provided by the policy that lowered the payroll tax from 6.2 percent to 4.2 percent, The Washington Post reported Saturday.
Economists say payroll tax breaks have immediate effects on the economy, giving increased consumer spending power to those who earn relatively lower wages. In addition the increased take-home pay is ongoing, which prolongs the stimulative effect.
Rep. Chris Van Hollen, D-Md., has pushed for an extension of the payroll tax break.
“If we’re going to look at anything, we should look at a payroll tax cut or other measures that have a similar effect,” Van Hollen said.
A White House official said Friday there was “no specific new proposal such as this one at this time.”
For the long term, President Barack Obama has proposed extending the Bush era tax cuts for households making under $250,000 per year. Without passage of that proposal, the U.S. budget would go over the so-called fiscal cliff, which has become the popular name for a series of tax hikes and spending cuts that would automatically go into effect Jan. 1 if Congress does not intervene.
Republican presidential nominee Mitt Romney has said he would drop income tax by 20 percent across the board and make up the lost revenue by closing loopholes, but he has not identified which deductions he would eliminate.
Copyright 2012 by United Press International