CAP en Español
Small CAP Banner

We Can’t Allow the Payroll Tax Cut and Unemployment Benefits to Expire

Allowing Them to End Will Threaten the Economic Recovery

SOURCE: AP/Manuel Balce Ceneta

President Barack Obama delivers a statement at the White House, Saturday, December 17, 2011, following the Senate vote to approve legislation continuing the Social Security payroll tax cut and unemployment benefits for two months.

    PRINT:
  • print icon
  • SHARE:
  • Facebook icon
  • Twitter icon
  • Share on Google+
  • Email icon

The Senate overwhelmingly approved a bipartisan compromise Saturday to prevent the payroll tax cut and unemployment benefits from expiring at the end of the year. The House will hold a critical vote on the measure later today.

If the House doesn’t approve the measure, the current payroll tax holiday will expire at the end of the year. As a result, taxes will go up for 160 million workers, starting with their first paychecks of 2012. The typical middle-class household tax increase in 2012 will be about $1,000. The combined effect of this across-the-board middle-class tax increase on consumer demand would seriously threaten the fragile economic recovery.

Congressional inaction through 2012 would also cause unemployment insurance benefits to run out for more than 5 million workers. The unemployment rate is still 8.6 percent, and for every one job opening, there are four people actively looking for employment. Cutting off unemployment benefits would not only create vast uncertainty and hardship for affected families, but it would also cause the economy to lose about $50 billion in demand, which would further hinder the recovery and cost more jobs.

As House members consider their vote on the bipartisan Senate compromise, they should consider the impact on their states. The maps below show how much taxes will rise on the typical middle-income family in each state, and how many families stand to lose unemployment benefits in each state.

Payroll tax cuts

UI

Seth Hanlon is Director of Fiscal Reform and Heather Boushey is Senior Economist at the Center for American Progress.

To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund)
202.741.6285 or kpeters@americanprogress.org

Print: Anne Shoup (foreign policy and national security, energy, LGBT issues, health care, gun-violence prevention)
202.481.7146 or ashoup@americanprogress.org

Print: Crystal Patterson (immigration)
202.478.6350 or cpatterson@americanprogress.org

Print: Madeline Meth (women's issues, Legal Progress, higher education)
202.741.6277 or mmeth@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Lindsay Hamilton
202.483.2675 or lhamilton@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org