Senate may vote this week on new payroll tax plan

December 5, 2011

Senate may vote this week on new payroll tax plan

Washington, Senate Majority Leader Harry Reid hopes to get a vote this week on his soon-to-be proposed "compromise" to extend a popular payroll tax cut, a Democratic aide said on Monday.

The aide said Reid plans to release details of the proposal later in the day, and it would represent a middle ground between rejected Democratic and Republican approaches to cover the cost of renewing the tax break set to expire on December 31.

Last week, the Senate defeated a Democratic proposal to pay for it with a tax hike on the rich. It then killed a Republican proposal to cover the cost by extending a federal worker pay freeze and downsizing the federal workforce.

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The aide said Reid is guardedly hopeful that his proposal will win bipartisan passage in the Democratic-led Senate, and that a vote may be held this week.

"It will be a compromise - a compromise between the Republican approach and our approach," the aide said.

"It will be very difficult for Republicans who want to be on the right side of this issue to vote against it," the aide said.

Republicans were initially reluctant to embrace President Barack Obama's called to extend the payroll tax cut, citing its projected $110 billion cost next year and voicing doubt that it would stimulate the economy.

But with fears of a political backlash in the run-up to November's presidential and congressional elections, their leaders have decided to push for an extension - provided an agreement can be reached on how to pay for it.

Without congressional action by December 31, the payroll tax that workers pay would revert to 6.2 percent, up from the current 4.2 percent tax. On average, it would cost American families about $1,000 a year.

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