New Year's Day May See Payroll Tax Hike

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Political brinkmanship in Washington means millions of Americans may see a tax hike on New Year's day.

House Republicans are balking at a Senate bill that extends the payroll tax cut for only two months. They say that's not enough.

They also want the Senate, already adjourned for Christmas, to return to Washington to negotiate.

"I think it's time for the Senate Democrat leaders to follow the President's example and put their vacations on hold," House Speaker John Boehner said.

Today the Republican-controlled House is ready to ditch the Senate bill that would have extended the Social Security payroll tax cut for two months.

House Republicans say the bill is merely a stop-gap measure.

"Our members do not want to just punt and do a two-month short-term fix where we have to come back and do this again," Boehner said.

But Democrats say the Republicans are walking away from a deal that would help Americans until a longer-term solution is reached.

"It's just the radical, Tea Party people who are holding up this tax cut for the American people and jeopardizing our economic growth," former Speaker Nancy Pelosi said.

At stake are social security payroll taxes paid by 160 million Americans in the workplace.

If Congress doesn't work out a deal, their payroll taxes will go up starting Jan. 1.

Americans making $35,000 annually could pay an extra $700 in taxes. And those earning $50,000 a year could pay an extra $1,000.

House Republicans say they want negotiations on a year-long extension of the tax cut. They say such a plan would mean more certainty for job creators.

But whether they can get the recessed Senate back in session is questionable at best.

House Republicans say they'll move today to set up an official House-Senate negotiating panel to work out the issue.

But the Senate's top Democrat said he will refuse to negotiate until the House passes the short-term bill.

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CBN News
Heather Sells

Heather Sells

CBN News Reporter

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