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NTU’s Views on the Extension of the Lower Payroll Tax
An Open Letter to the United States Congress:

February 16, 2012

Dear Member of Congress:

On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write to offer our views on the latest extension of the lower payroll tax rate, which will soon expire absent Congressional action. As you may know, NTU actively supported the efforts of House Leadership  last year to maintain the tax cut for 2012, paired with spending reductions and reforms to keep from adding to our staggering $15 trillion national debt.

This morning, negotiators announced a package that would continue the payroll tax cut through the end of the year, extend unemployment benefits, and enact the “doc fix” measure pertaining to Medicare physician reimbursements. The unemployment and physician reimbursement portions would be matched with reductions in spending, while the payroll tax will not be. Such a combination is far from ideal, but is ultimately proving necessary in order to prevent sudden tax increases on working families due to the inability of legislators to agree upon reasonable pare-backs of excessive spending.

Despite the recalcitrance of some Members of Congress, there remains a tremendous amount of overspending that can be tackled in a bipartisan manner. In late 2011, we joined with the liberal U.S. Public Interest Research Group to release a report called Toward Common Ground, which laid out over $1 trillion in specific spending reductions that both of our groups could jointly support. These items represent the low-hanging fruit of the federal budget and would make for easy pickings to accompany an extension of the payroll tax cut.

To be clear, Congress need not “pay for” extension of the lower tax rate in the same manner as spending increases because letting Americans keep their own money is not an “expenditure.” Furthermore, this “compromise” bill has been put on a fast track to passage because the expiration of the current tax rate is now days away. Nonetheless, lawmakers should not abandon the cause of managing its impact within an overall policy framework that must place less emphasis on borrowing and more emphasis on limited, sustainable government. Going forward, NTU urges Members of Congress from both parties to rededicate their efforts toward this vital fiscal goal.


Andrew Moylan
Vice President of Government Affairs