The legislation would suspend 12.4% payroll tax, which
is shared by employers and workers, for one month – an
effort to stimulate the sluggish economy.
Suspension of the tax, which is used to fund the Social Security retirement program, would put extra cash in the pockets of both businesses and their employees.
According to Reuters, Hubbard said that rather than pushing a payroll tax suspension, the White House wants to emphasize its initial ideas of offering one-time tax rebates and accelerating already enacted permanent cuts in income taxes.
He also adds that suspension of the tax could also interfere with the administration’s ongoing discussions about how to reform Social Security.
However, Domenici argues that Social Security’s financial viability would not be harmed, because the government would use general revenues to reimburse the money lost from a temporary payroll-tax cut.