Each weekday morning this week, the Washington Journal will highlight specific taxes, deductions, and budgetary programs that will be impacted if the country goes off the so-called “fiscal cliff.” On Thursday, we look at the Payroll Tax Cut.
The payroll tax was temporarily lowered in 2011 and 2012, resulting in a 2 percentage-point increase in American's take-home pay. The current tax cut will expire on Dec. 31. News organizations are reporting that politicians from both parties seem set to allow the tax cut to expire, as it was always intended to be a temporary boost to American's spending power and not a long term solution.
If allowed to expire, the rate will return to 6.2 percent. Chairman of the Council of Economic Advisors Alan Krueger told reporters at Monday's White House briefing that the payroll tax cut was among the many tax provisions set to expire at the end of the year that had to be on the table during discussions with Congress.