Middle Class Tax Act Set To Expire; Could Hurt NJ [AUDIO]
The U.S. Sentate is expected to vote on the Middle Class Tax Act, which would expand and extend the payroll tax cut, putting more than $2,000 back into the pocket of the average New Jersey family next year.
Jersey U.S. Senator Bob Menendez (D-NJ) is a co-sponsor of the bill.
"It will not only benefit New Jersey residents in their wallets, but at the same time, since that money will be spent on the economy, it will create a demand for businesses to grow jobs and those people who would be employed would help create a ripple effect on the economy."
The current two-percent payroll tax break is set to expire at the end of this month. If passed, the Middle Class Tax Cut Act 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 New Jersey working family seeing more than $2000.
"Hard working middle class families are struggling in this economy, and the last thing they need is a tax increase," said Senator Menendez. "If the tax cut expires, New Jersey families will have less money to spend and businesses will hire fewer workers. Numerous economists agree on how vital the tax cut is to this economy, and there is absolutely no reason why Congress shouldn't get this done."
Key Provisions Of The 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.
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.
The bill is expected to be voted on by the Senate today.