Report: Payroll tax cut not likely to be renewed

A temporary payroll tax holiday that expires at the end of 2012 will likely not be extended by Congress, the New York Times reported Oct 1.

The expiration of the payroll tax measure, which has grown politically unpopular, will affect 160 million American wage earners, costing them an estimated $95 million in lost income in 2013 alone, according to the Times.

Congress in February passed a bipartisan, 10-month extension of the tax holiday when House Republicans relented on their demand that the measure be paid for, ending more than two months of back-and-forth debate.

The legislation reduced the payroll tax on wages up to $110,100 to 4.2 percent from 6.2 percent.

That translates to $700 in additional income for someone earning $35,000 in 2012, and to $2,202 in additional income for someone earning $110,100 or more.

Neither Democrats nor Republicans appear willing to pass another extension of the payroll tax cut, according to the Times, with House Minority Leader Nancy Pelosi telling reporters and Treasury Secretary Timothy Geithner testifying to Congress that the payroll tax cut should be allowed to expire.

[Editor’s note: The headline for a previous version of this article incorrectly stated that the payroll tax would not be renewed. A temporary extension of a payroll tax cut, rather than the payroll tax itself, is set to expire at the end of 2012.]