Throughout the fiscal cliff negotiations Republicans have insisted on preserving tax cuts for the richest 2 percent of Americans, but have dogmatically opposed maintaing a payroll tax holiday that disproportionately benefits the middle class. Payroll taxes fall harder on those lower down the income ladder and economists believe that allowing 2011’s 2-percent decrease to expire could undermine economic growth, while permitting the top rates to go up would have only minimal impact.
On Tuesday morning, during an appearance on SiriusXM’s POTUS Politics, Rep. Tom Price (R-GA) argued that raising marginal rates on the very rich would slow-down job creation but insisted that the nation’s debt problem requires the government to allow the payroll tax holiday to expire. Price said that individuals — presumably those who benefit most from the holiday — must feel “more pain” to help set the country on a sound fiscal footing:
TIM FARLEY (HOST): The payroll tax holiday is likely going away. People will likely get that increase in the deduction from your pay as of January 15, you’ll see your first paycheck, 2 percent will be gone. And I wonder if, even if you come to a solution…people are going to look at their paychecks and say, ‘I thought we solved this and look at all this money being taken out of my paycheck.
PRICE: Well, remember, step back and recognize that we’ve had four straight years of trillion dollar plus deficits, we’re $16 trillion plus dollars in debt. This doesn’t get fixed without some pain for everybody…The remarkable challenge that we have requires more work and more diligence and more pain for more individuals.
Recent nonpartisan studies have shown that the Bush tax cuts for the rich — those on income above $250,000 — don’t boost the economy, while providing relief to lower and middle class Americans could significantly speed up the recovery. According to the Congressional Budget Office (CBO), for instance, “Extending both the current 2 percentage-point cut in the payroll tax and emergency unemployment benefits…would boost real GDP by about three-quarters of a percent by the end of 2013.”
But unfortunately, the GOP is more interested in ideologically-driven policies that shrink government — and make “very painful cuts” to benefits — than growing the economy.