US Republicans Propose Payroll Tax Holiday

by Mike Godfrey, Tax-News.com, Washington

29 November 2001

In an attempt to break the partisan deadlock over the forthcoming economic stimulus bill, US Republicans Wednesday proposed a one month payroll tax hiatus in order to give the US economy an immediate boost.

The tax cut plan, which would be evenly split between employers and employees, would amount to around $38 billion if enacted in December, or around $43 billion if passed early next year. Although this may mark a step forward in the debate, which on the Republican side has centred around tax cuts, and in the Democrat camp on benefits for laid-off workers and domestic security, reports that this new proposal represents the light at the end of the tunnel may be somewhat premature.

It became clear earlier this week that despite promises made in the immediate aftermath of the September 11th terrorist attacks, presenting a united front is becoming increasingly difficult for the two main parties as neither is prepared to budge from their principles over the economic stimulus bill, leaving the US economy continuing to flounder in the grip of the first recession in a decade.

Although Democrats have said that they are prepared to consider the idea of a payroll taxcut, they are determined that Republicans should consider additional measures such as bio-terror readiness and domestic security, rather than concentrating on tax cuts for big business and the wealthiest US citizens.

'That's something we would certainly be willing to consider,' said the Democrat Majority Leader, of the payroll tax proposal, 'but again, not at the expense of giving up all our commitment to homeland security.'

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