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Payroll tax divides candidates

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An extension of a payroll tax cut dominated headlines coming out of Washington over the summer, with Democrats and Republicans accusing one another of playing politics with middle-class families’ paychecks in the balance.

With autumn setting in, the payroll tax cut is set to expire again. But this time, there are fewer headlines, and there’s also less resistance to letting it expire.

U.S. Rep. William L. Owens, D-Plattsburgh, signaled in a statement that he might support letting the payroll tax cut expire under certain conditions.

“If it is allowed to expire, it would have to be in combination with an extension of middle class tax cuts and the elimination of tax breaks for the very wealthy,” Mr. Owens said Monday. “We must be mindful of how we will pay for an extension of current law and what effect it would have on the Social Security trust fund.”

His incertitude put him at odds with his Nov. 6 opponent, Republican Matthew A. Doheny, who said in a statement: “I would support keeping the payroll tax rate stable. The hard working people of the north country, Adirondacks and capital region know how to spend their money better than our current congressman and the president.”

The payroll tax stands at 4.2 percent. The rate was cut from 6.2 percent in the midst of economic turmoil earlier in President Obama’s term. According to the White House, 160 million workers pay the payroll tax. It will revert to 6.2 percent in January if Congress doesn’t act, raising taxes on many middle-income earners.

And according to a report Sunday in the New York Times, the White House and Congress are prepared to let it expire. Policymakers and legislators are more focused on the political tumult over the expiring income tax cuts that were instituted during President George W. Bush’s administration, according to the Times. The Times report said that an individual making $35,000 saved $700 in 2012 from the payroll tax cut.

Mr. Owens’s statement telegraphed that the Bush tax cuts could indeed be a hang-up in the process. His allusion to the extension of middle class tax cuts and the expiration of tax breaks for the very wealthy was likely a nod to that fight. Mr. Bush cut tax rates for the wealthy, but he also cut the rates for the middle class.

Democrats like Mr. Owens want them to expire on the wealthy, a line that Mr. Owens draws at $500,000. The tax cuts should be extended, or remain the same, for the middle class, Mr. Owens says. An extension of the payroll tax cut, Mr. Owens said, “should be part of the discussion of broad, overall tax reform effort.”

The payroll tax funds Social Security, the retirement program for the elderly and disabled. A cut in the payroll tax had worried some legislators because it would decrease revenues to the program, but it won the support of majorities in Congress because, members said at the time, it would help stimulate the economy with more middle-class spending. According to some independent analysts, letting the tax go back up would have the opposite effect, and could be a drag on the economy.

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