Between Thanksgiving and Christmas, Congress has an important tax policy decision to make. With the economy still struggling and one in eleven Americans out of work, January 1 would be an awful time to cut every paycheck in America. But, every paycheck in America will shrink unless Congress acts to extend, and preferably expand, the payroll tax holiday by the end of the year.
Up and down Wall Street, economists are warning about the severe consequences of inaction on payroll taxes and extended unemployment benefits. Goldman Sachs estimates that expiration of the payroll tax cut would reduce growth by as much as two-thirds of a percentage point in early 2012. Moody’s Mark Zandi adds that if Congress does not extend the payroll tax holiday and unemployment benefits for 2012, “there will be approximately one million fewer jobs by year’s end.”
Failure to extend the payroll tax cut would hurt workers in nearly every job and income category. For example, the nation's 1.4 million truck drivers, whose salaries average $39,450, would pay $789 more in payroll taxes, on average. The nation’s 2.7 million nurses, whose salaries average $67,720, would lose $1,354, on average.
The table below is one that every member of Congress should study: