DiNapoli: Congressional Inaction on the Extension of the Payroll Tax Cut Could Cost New Yorkers $7.1 Billion in 2012
If Congress does not reach an agreement on the extension of the payroll tax cut by Dec. 31, New Yorkers will pay an estimated $7.1 billion in additional taxes in 2012, according to an analysis by New York State Comptroller Thomas P. DiNapoli.
"At a time when families are struggling to make ends meet, this money should stay in the pockets of working New Yorkers rather than going to Washington," DiNapoli said.
"Partisanship has a $7.1 billion price tag for residents of this state if an agreement can't be reached to extend the payroll tax cut and that's simply not what New York families need right now."
If the payroll tax cut is not extended, the increase in taxes, by annual wage, for New York residents in 2012 would be:
Wage Tax Increase
$ 20,000 $ 400
$ 40,000 $ 800
$ 60,000 $1,200
$ 80,000 $1,600
$100,000 $2,000
$110,100 (and above) $2,202
In December 2010, President Obama signed a one-year temporary payroll tax cut into law that was set to expire on Dec. 31, 2011. This law, among other provisions, reduced the payroll tax rate from 6.2 percent to 4.2 percent. Recently, after negotiating with Congress, the President agreed to continue the rate reduction at 4.2 percent for a 2-month period. On Saturday, the Senate passed a bill by a vote of 89-10 to extend the rate reduction for 2 months to allow time to negotiate a way to extend and pay for the tax cut. On Tuesday, the House voted 229-193 to dismiss the Senate bill.
The State Comptroller's analysis was completed using personal income tax data from the New York State Department of Taxation and Finance.