Payroll tax cuts expire this month unless Congress adds extension
Johnson argues that the Democratic plan for the payroll tax cut is good policy that would allow South Dakotans to keep more of their tax money at a time when they really need it and are likely to spend it in ways the economy really needs.
Using county-by-county U.S. Census Bureau data, Johnson showed what typical South Dakota families in different parts of the state will gain, or lose, depending on how the payroll tax issue turns out. In Pennington County, the typical family would save $1,456 a year with the Democratic plan, which expands the existing tax cut from 2 percent to 3.1 percent. If the existing cut is allowed to expire, that same family will pay $939, Johnson said.
In Minnehaha County, the gain and loss would be $1,502 and $969, and in Hughes County it would be $1,743 and $1,125.
“This map shows just how much working families in counties across South Dakota would have to pay if the payroll tax cut expires this month,” Johnson said in the news release. “It’s time to come together to pass this extension to keep hard-earned dollars in the pockets of South Dakotans. The payroll tax cut extension is a proven tool to create jobs and stimulate the economy.”
Thune disagrees, while maintaining a gentleman’s agreement with Johnson that, in general, keeps them from criticizing each other directly.
“I think with temporary tax incentives you get people doing temporary hiring. It’s hard to create permanent jobs with temporary tax policy,” Thune said. “It just hasn’t worked.”
Thune said he voted for the payroll tax cut last year because it was tied to an extension of more meaningful, longer-term tax breaks that he wanted to maintain. This year he sees the payroll tax cut as a failed idea that carries the double negative of reducing the flow of funds into the Social Security fund, possibly creating problems in the future for payouts that are vital to recipients.
“I don’t like it as a matter of policy,” he said. “It’s sort of a direct impact on our Social Security program. And as a matter of practice, it hasn’t worked. I’ve described it as a sugar high, and I think it’s very much that.”
Democrats, including Johnson, point to assurances from Stephen Goss, chief actuary of the Social Security Administration, that the payroll tax cut would have “negligible impact” on the Social Security benefits paid to retirees, survivors and the disabled “both in the near term and the long term.”