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GOP Leaders Say they Will Back Payroll-Tax Cut But Oppose Democrats' Millionaire's Tax to Pay For It

A fly has gone into the ointment of Democrats plan to continue the regurgitated talking point that Republican leaders in Congress are unwilling to work with Democrats to pass any bipartisan legislation. Republican leaders announced Tuesday that they would join Democrats in supporting an extension of the 2011 payroll-tax cut, which is currently at 4.2 percent from 6.2 percent, but will offer a new proposal to achieve it other than the plan presented by Senate Democrats which pays for the tax break by putting a tax on people earning more than $1 million a year.

“I think at the end of the day there’s a lot of sentiment in our conference, clearly a majority sentiment, for continuing the payroll tax relief that we enacted a year ago in these tough times,” said Senate Majority Leader Sen. Mitch McConnell. “But we believe with this kind of deficit, we ought to pay for it.”

The Hill notes that Republicans dismissed an extension of the cut earlier this year as a "sugar high" that would do litte to create jobs.

"I think it's a mistake to do this little tax that little tax," South Carolina Sen. Jim DeMint told The Wall Street Journal. Nonetheless, DeMint says he will join in backing the extension. "We need to reform our tax code if we're going to be competitive internationally."

The plan to extend the package released by Senate Democrats this week offers $265 billion in payroll tax relief, cuts payroll taxes on workers further from 4.2 to 3.1 percent of their salary,  and pays for it by a 3.25 percent tax on income in excess of $1 million. In addition, the Democrats plan would  lower the payroll tax for companies to 3.1 percent on the first $5 million in wages, which they claim would all in all give families an average tax relief of $1,500 next year.

Republicans say they will support support the tax cut extension, but not through a surtax on job creators.

“We think it ought to be paid for and not by raising taxes on the people we’re depending upon to create jobs,” Senator John Cornyn, a Texas Republican, told Bloomberg Businessweek yesterday.

It's unclear exactly how Republicans propose to pay for the one-year extension. Sen. Jon Kyl has said that details would be available later today.

One last thing…
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