Touted as an answer to the stalled economic stimulus bill, the legislation would give employees and employers a month-long holiday from paying the 12.4% payroll tax.
Earlier this week in the Senate, Republicans successfully blocked the Democratic-backed economic stimulus package this week. Senator Domenici’s proposal, which has attracted interest from both parties, could help break the stalemate.
A December payroll holiday would carry a $38 billion price tag, while one in January could cost $43 billion – because payroll taxes, which finance Social Security, are paid on the first $80,400 of earnings, a limit which about 4% of wage earners reach by December.
The Social Security trust fund would be reimbursed with funds from general revenues.