STATE – At least one New Jersey lawmaker has concerns about President Barack Obama’s compromise plan to preserve Bush-era tax cuts that was unveiled yesterday.
Under the plan, all taxpayers – regardless of income – would see their income tax rates stay the same for another two years. Congressional Democrats opposed extending the tax cuts for people at the upper end of the income scale, but Republicans killed bills that limited the extensions.
Sen. Frank Lautenberg (D-NJ) said yesterday that he didn’t know if he could support the new plan.
“Because of a good business career I made some money and the last thing I need is a tax cut,” he said. “I’d rather have a strong country than a tax cut. That’s my gift to my kids, that’s my gift to my country.”
The compromise would also reduce the Social Security payroll tax by two percentage points for one year, adjust the Alternative Minimum Tax to prevent as many as 21 million households from having to pay it, keep the capital gains tax at 15 percent for two more years and extend unemployment benefits for an additional 13 months.
The moves would add $900 billion to the cost of the deficit, and the compromise plan breaks Obama’s campaign pledge to eliminate some tax breaks for the top two percent of American income earners.
The Social Security payroll tax reduction would replace Obama’s Making Work Pay credit, which would be allowed to expire. The credit was worth up to $400 for individuals and $800 for families with low and moderate income.
Under the plan, individuals making less than $20,000 and families with incomes below $40,000 will pay more in taxes because the credit was worth more than their anticipated payroll tax savings.
“It will come to a few dollars a week,” said Roberton Williams, an analyst at the nonpartisan Tax Policy Center, “but it is an increase.”
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