Republicans Blocked Middle Class Tax Cut; Chose to Protect Millionaires over Middle Class

Washington - U.S. Senator Robert Menendez (D-NJ), co-sponsor of the Middle Class Tax Cut Act, said tonight that Democrats would continue to fight to ensure that middle class families get the tax breaks they need to put real money back in their pockets next year. The Middle Class Tax Cut Act - which Senate Republicans blocked - would help create jobs and stimulate demand by giving approximately 160 million workers an increased payroll tax cut, with the average American family seeing nearly $1,500 in additional take-home pay and the average working family in New Jersey seeing more than $2000. The bill also cuts taxes for small businesses - the job creators in this country - to help them expand and create jobs.

"America's middle class is the backbone of our nation and as they struggle, our nation suffers," said Menendez after Republicans blocked a vote on extending and expanding the payroll tax cut because it asked millionaires to pay their fair share. "Neither our working families nor our economy can afford to let these tax cuts expire - we must extend and expand them. So let's get back to work and get this done."

Despite majority support for the Democrats' proposal, they were unable to move it forward because Republicans' opposition required a full 60 votes rather than a majority.

Republicans would not support the bill because it was paid for with a surtax on income over $1 million. Instead, they offered a proposal that would extend the tax cuts for a year, but would not expand them. Their proposal would also not provide any tax cuts for small businesses. The plan pays for the extension in part by cutting 200,000 federal jobs.

"The Republicans offered a plan that does not give one more cent of relief to the middle class and not one dime of relief to small businesses - the same businesses the Republicans continue to claim are the job generators we must protect," Menendez said in voting against the Republican proposal. "And they put the burden of paying for itentirely onmiddle class workers rather on the millionaires who can most afford it."

Middle Class Tax Cut Act Of 2011:

  • Provides Tax Cut to 160 Million Workers. The bill cuts in half (from 6.2% to 3.1%) the Social Security payroll tax paid by employees and the self-employed on their wages and salaries for 2012. Approximately 160 million workers will benefit from this tax cut, with the average family seeing nearly $1,500 in additional take-home pay. A family earning New Jersey's median income will save $2,122. If the current 2% payroll tax cut expires, the average family will pay about $1000 more in taxes next year.
  • Cuts the Payroll Tax in Half for 98% of U.S. Businesses. The Senate bill cuts in half (from 6.2% to 3.1%) the Social Security payroll tax paid by employers on the first $5 million of taxable payroll for 2012. This will benefit all businesses, but 98% of businesses will see their portion of the Social Security payroll tax cut in half.
  • Gives an Added Incentive for Businesses to Hire New Workers. The bill completely eliminates (from 6.2% to 0%) the Social Security payroll tax paid by employers on the first $12.5 million of an employer's increased taxable payroll for the 4th quarter of 2011 and $50 million in increased payroll for 2012.
  • Avoids Tax Hike on the Middle Class by Asking Millionaires to Pay Their Fair Share: In order to prevent a tax hike on 160 million American workers, the bill imposes a 3.25% surtax on modified adjusted gross income in excess of $1 million for both single filers and married couples filing jointly. The surtax is effective for taxable years beginning after December 31, 2012.
  • Protects Social Security. The legislation would not affect the Social Security Trust Fund. It requires that the Fund be made whole through transfers from the General Fund.

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