On Thursday, the U.S. Senate rejected the plans to extend tax cuts to payroll proposed by Democrats and Republicans, clearing the way for negotiations on a deal that could boost the economy next year.
In votes taken during the night, the Senate rejected a Democratic plan that would have extended and expanded tax cuts to payroll to expire on December 31.
Republicans objected especially to a new tax on the wealthy to offset the 110,000 million dollars in revenue that was expected to lose the government to extend the temporary tax cuts.
After the vote, President Barack Obama said in a statement, “makes no sense to raise taxes on the middle class at a time when many are still trying to stand.” He urged Congress to reach an agreement to extend tax breaks to payroll.
The White House, investment banks and some economists have warned in recent days that the U.S. economic growth in 2012 could suffer if you allow the tax cuts expire.
After the Democratic bill was rejected, the Senate rejected a Republican plan alternative quickly. It also would have extended tax cuts for one year. But the proposal did not include Democrats to further reduce taxes on workers and to cut a burden on payroll paid by employers.
The division of the Republicans against an extension of a tax cut payrolls was evident in the Senate because a majority of 47 senators voted against the party of the opposition plan.
Tax revenues are used to finance the program of social security retirement. But Obama and his fellow Democrats have pushed for cuts as a way to put more money into the hands of workers amid a weak economy.
The campaign to extend the temporary tax cut payrolls, which has been in place since early this year, received a boost on Thursday when the most Republican in Congress recognized that help the economy.
In doing so, the chairman of the House of Representatives, John Boehner, was put in an antagonistic situation with some members of his party were skeptical about its benefits.
Minutes after he declared “I am not an economist. I do not know what kind of impact will be,” Boehner said that to renew the tax cut could be beneficial to the economy.
“I do not doubt that there is tax relief payrolls actually helps the economy by allowing more Americans (…) retain more of their money,” Boehner said when pressed by journalists.
Boehner’s comments, quickly welcome the White House, in sharp contrast to what was said by some members of his party a few days ago.
Many Republicans do not believe that extending the tax benefits this year beyond will help create jobs and say they only have a temporary impact on the economy.
Earlier this week, Republican leaders were not very enthusiastic about the extension of tax cut, but have been under great political pressure to do so before parliamentary and presidential elections of 2012.
Category: Business News