If this month’s chaos over the payroll tax extension seems familiar, it should. We had pretty much the exact same fight last year, which ended December 17th when President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. That bill extended the Bush tax rates for two years, extended a slew of Obama stimulus tax loopholes for two years, extended Unemployment Insurance for one year, extended the Alternative Minimum Tax patch for one year, extended a slew of other tax loopholes (like ethanol and railroad credits), and created the payroll cut everyone is fighting over today. Total price tag of that 2010 deal: $858 billion. That is larger than Obama’s first stimulus.
For all the attention that the payroll tax rate is getting, no one seems to care that the usually bipartisan AMT patch, and the rest of the one-year extensions, are all set to expire too. Neither the House nor Senate payroll tax bills do anything for the rest of the tax extenders. That means that in addition to the 160 million Americans who might see their payroll taxes go up if the Senate does not agree to a one-year fix, another 21 million Americans will see their income tax burden go up as well.
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