As it now stands, payroll taxes are set to go up at the end of the year. This impending hike would cost the typical American family almost $1000 next year, and would certainly impede the economy's path to recovery.
Yesterday, Democrats unveiled a plan
to actually lower payroll taxes from their current levels and make sure they won't be raised until 2013 at the earliest. Their plan also cuts the payroll tax for 98% of U.S. businesses and gives extra incentives for businesses to hire new workers between now and the end of next year. To ensure these measures won't add to the deficit, Democrats are proposing a 3.25% surtax on incomes over $1 million
. Naturally, this part of the plan isn't sitting pretty with Republicans, who are huge fans of anyone who has already achieved the American dream.
A spokesperson for House Speaker John Boehner had this to say in response: "Republicans have said that extending the payroll tax break is a potential area of common ground, but coupling it with a job-killing tax hike on small businesses makes no sense whatsoever."
Boehner's spokesperson added that about 34 percent of small business income would be affected by the proposed surcharge.
Technically, Boehner's spokesperson is correct; a hefty portion of small business income would be affected-- so long as your definition of "small businesses" includes large law firms, bond traders who invest some of their income in investment partnerships, or any of the 70% of million-dollar earners who find ways to refer to themselves "small business owners"
when they file their taxes.