MINNEAPOLIS (WCCO/AP) — The Senate is preparing to vote on a measure that would extend a current payroll tax into next year.
If it’s not renewed, Sen. Al Franken says the average Minnesota family would pay an additional $1,100 in taxes next year.
The costs are higher in Dakota and Hennepin Counties because in those two counties, the average paycheck is also higher.
If the tax cuts expire, the average person would pay the government 2 percent more in taxes. Democrats, like Franken, say that would be bad for working families.
“All the way up to $2,000 more per working family, somewhere from $1,500 to $2,000 per family and that is money working families tend to spend,” Franken said.
President Barack Obama not only wants to extend the 2-percent cut but increase it to 3.1 percent in Hennepin County, where the average median income is $61,000. That would mean the tax cut would increase from $1,200 in 2011 a year to $1,900 a year in 2012.
The President wants to pay for the tax break with a 3.25 percent tax increase on those making more than $1 million a year. A key presidential adviser told us that’s good for Minnesota.
“In Minnesota that would mean 3.2 million people would get a tax cut for the state of Minnesota,” said Alan Krueger, chairman of the President’s Council of Economic Advisers. “That would be an additional $3.7 billion in tax relief.”
Republicans like Minnesota Congresswoman Michele Bachmann have come out firmly against the President’s plan to tax millionaire earners. She also said she’ll fight any effort to extend the payroll tax cut.
Bachmann says President Obama proposed the tax cut to create jobs, but says it’s failed in that effort. The Republican presidential hopeful says instead, the tax cut has punched a big hole in the federal budget and threatens programs like Social Security, which benefit the elderly.
She conceded there can be some political risks of her position.
Other Republicans say they would support the tax cut extension if a way can be found to pay for it.
The Repubilcans are feeling the heat to try and find a way to extend these tax breaks, but they are also feeling pressure from fiscal conservatives who are worried about the impact on the deficit. The clock is ticking here, a compromise needs to be reached by Christmas or the tax cuts will expire.
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