Senate members announced over the weekend they were unable to create a one-year extension to the payroll tax cut. However, they did pass a two-month extension that House members are now expected to vote down in favor of attempting the full-year payroll tax cut extension once again.
Senate Creates 2-Month Payroll Tax Cut Alternative
The battle of the payroll tax cut extension continues into the House of Representatives’ holiday break as lawmakers work to agree on a tax bill. Last week, the House passed a one-year extension to the tax cut, which provides American taxpayers with a 2-percent reduction in their Social Security payroll tax.
When the House passed its extension on Tuesday, it wanted to incorporate a measure that would allow for early approval of the XL Keystone oil pipeline project, which would bring oil from Alberta, Canada to Texas.
Democrats in the Senate and President Barack Obama were strongly opposed to rushing approval of the oil pipeline project since the State Department had not considered objections from environmentalists.
In response, the Senate created its own tax bill over the weekend that only served as a two-month solution. In it, the Social Security payroll tax cut of 4.2 percent, emergency federal unemployment benefits and a scheduled 27-percent cut in payments to Medicare physicians would all be extended to Feb. 29.
Temporary 2-Month Payroll Tax Cut to Meet Opposition
The House was first expected to consider the Senate payroll tax cut bill, but House Speaker John Boehner said in a news conference on Monday that they will vote the bill down then request immediate negotiations on a full-year renewal that can provide “certainty for people who are trying to create jobs.”
One portion of the Senate’s extension that House members agreed with was how to pay for it, which in part, would come from a requirement that Fannie Mae and Freddie Mac charge mortgage lenders higher fees.
Boehner did not provide an estimate on how long it might take for lawmakers to produce compromise but said the matter will be resolved before the payroll tax cut and benefits expire on Dec. 31.
