U.S. Senator Debbie Stabenow today announced legislation that she is cosponsoring, the Middle Class Tax Cut Act of 2011, which would cut taxes for Michigan families and small business owners. Unless Congress acts this month, a two-percent payroll tax cut for middle-class families will expire at the end of the year. The Middle Class Tax Cut Act of 2011 would not only extend the current two-percent payroll tax cut but would also boost it to 3.1 percent, increasing the take-home pay for Michigan families. Passing this legislation would mean the average Michigan family would take home approximately $1,400 more next year than they would if Congress does not act (county-by-county data is available below). The Treasury Department estimates 5.2 million Michigan workers will benefit from the tax cut, pumping an additional $5.5 billion dollars into the state's economy.
The legislation would also cut payroll taxes in half for most American businesses and totally eliminate eligible businesses' payroll taxes for new hires, helping business owners expand their companies and hire new workers.
Senator Stabenow said: "The last thing middle-class families need is a tax hike starting January 1st. Instead, Congress needs to come together and pass common-sense legislation to put more money into the pockets of Michigan families and cut taxes for Michigan businesses, so they can hire new workers. Failing to act could have devastating effects on our economy."
RaeAnn Loy, Resident of Marquette County said: "The payroll tax cut helped me keep more money in my pocket, money that I earned. Senator Stabenow has always put Michigan families first, and I am thankful that she is standing up for us once again."
Dan Edson, President of American Proficiency Institute in Traverse City said: "As a business owner, this tax cut will make it easier to grow my business and hire new workers. It will also be nice to see my friends and neighbors with more money to reinvest in our community. I want to thank Sen. Stabenow for her work to cut taxes for Michigan businesses and families."
Chris Reynolds, Resident of Bay County said: "It is a struggle every day to pay the bills, so there is no way we can afford a tax hike. I'm proud to have a Senator like Debbie Stabenow fighting to cut taxes for Michigan families instead."
Janet Tessmer, Resident of Oakland County said: "This tax cut would go a long way to help support my family's budget. I appreciate Sen. Stabenow standing up for middle-class people like me who need every little bit of help we can get."
The Middle Class Tax Cut Act of 2011 would cut in half (from 6.2% to 3.1%) the Social Security payroll tax paid by employees and the self-employed on wages and salaries. That would mean a Michigan family with a median household income of $45,254 would get a tax cut next year of $1,403.
The legislation would also cut in half (from 6.2% to 3.1%) the Social Security payroll tax paid by employers on the first $5 million of taxable payroll for 2012. This will benefit all American businesses, but 98% of businesses will see their portion of the Social Security payroll tax cut in half.
This bill would also provide an incentive to hire new workers by completely eliminating the payroll tax on new hires for eligible businesses.
Leading economists support extending the payroll tax cut to keep the economy moving forward. For example, Mark Zandi of Moody's Analytics has estimated that extending the payroll tax cut could create 750,000 jobs. And according to Barclays analyst Michael Pond, letting the payroll tax cut expire at the end of December could cause a drop in Gross Domestic Product of up to 1.5 percent.
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