Middle class families cannot afford a $1,000 tax hike right now. And small businesses looking to expand shouldnt have a higher tax burden next year.
But thats exactly what would happen if Congress fails to extend the Payroll Tax Cuts first passed in 2009 which are set to expire on December 31st of this year.
Right now, the United States Senate is considering an extension of the payroll tax cut which puts more money back in the pockets of hard-working, middle class Americans who work hard and play by the rules. And it would also expand the payroll tax cut to include the small business owners.
Im fighting to pass the Middle Class Tax Cut Act legislation that would extend and expand the payroll tax cut, providing an average Ohio household with a tax cut of $1,430 next year. If Congress fails to pass the Middle Class Tax Cut Act, the payroll tax rate would skyrocket from 4.2 percent to 6.2 percent on January 1st.
What will it mean for Ohioans if the payroll tax cut isnt extended?
Bob, a small business professional in Franklin County, recently wrote to me about the economic uncertainty that prevents customers from spending money (or having money) to put back into the economy in the form of purchases of goods and services from small businesses. He summed up his letter with a simple question: Doesnt anyone get it?
Ohioans know that allowing citizens to keep more money in their pockets will allow them to pay rising food and energy costs, pay their rent or mortgage, and contribute to the local economy by buying goods and services.
For an electrician or a plumber making about $50,000 annually, the Middle Class Tax Cut Act would not only preserve an existing $1,000 tax break, but it would also put an additional $550 a year in their pockets. If Congress fails to pass this commonsense legislation, the average nurse would see about $1,000 in additional taxes next year. If Congress fails to act, then we risk squandering an opportunity to help more than 5.7 million Ohioans take home more of their paycheck.
Economists of all political affiliations agree that a payroll tax cut will enhance our economic recovery empowering an estimated 200,000 Ohio small businesses to hire and keep the workers needed to increase production. Mark Zandi, who served as an economic advisor to John McCains presidential campaign, has said passing this legislation could create 750,000 jobs. He also said that our economy could succumb to another recession if we do not extend this tax credit. And every dollar in tax cuts generates $1.20 in economic activity, according to the Congressional Budget Office.
And this legislation would not increase the deficit. To make up for the lost tax revenue, the bill would impose a 3.25 percent surtax on the wealthiest Americans only taxing earned income at $1 million.
This legislation isnt about pitting Democrats against Republicans, or millionaires against the middle class its about working together to strengthen our nation. Given the fiscal challenges America faces, we need a balanced approach that helps bolster economic activity and creates jobs thats why we have to pass the Middle Class Tax Cut Act now.