Extending the Temporary Payroll Tax
Reduction: A Brief Description and
Economic Analysis
CRS Report for Congress Prepared for Members and Committees
of Congress Extending the Temporary Payroll Tax Reduction:
A Brief Description and Economic Analysis Donald J.
Marples Section Research Manager Molly F. Sherlock
Analyst in Economics January 10, 2013 Congressional
Research Service 7-5700 www.crs.gov R42103 Extending
the Temporary Payroll Tax Reduction Congressional Research
Service Summary Social Security is financed by payroll
taxes, which are paid by covered workers and their employers.
In the absence of a payroll tax reduction, employees and
employers would each pay 6.2% of covered earnings, up to an
annual limit, whereas self-employed individuals would pay
12.4% of net self-employment income, up to an annual limit.
In an effort to stimulate the economy, Congress, in December
2010, temporarily reduced the employee and self-employed
shares by two points (to 4.2% for employees and 10.4% for the
selfemployed), with the Social Security trust funds “made
whole” by a transfer of general revenue. The temporary
reduction was scheduled to expire at the end of 2011, but the
reduction was extended for two months as part of the
Temporary Payroll Tax Cut Continuation Act of 2011 (P.L.
112-78). The payroll tax rate reduction was extended through
the end of 2012 in the Middle Class Tax Relief and Job
Creation Act of 2012 (P.L. 112-96). Extending the reduction
through the end of 2012 would, by itself, increase the
deficit by an estimated $93.2 billion—raising concerns about
the apparent incompatibility of an extension with long-term
goals of fiscal sustainability. Earlier proposals to extend
the payroll tax reduction included some form of budgetary offset
to reduce or eliminate the effect on the deficit and address
concerns about long-term fiscal sustainability. Among the
budgetary offsets mentioned in extension proposals were a surtax
on high-income individuals, freezing federal employee pay,
and limiting certain federal benefits to high-income
individuals. Ultimately, both the Temporary Payroll Tax Cut
Continuation Act of 2012 (P.L. 112-78) and the Middle Class
Tax Relief and Job Creation Act of 2012 (P.L. 112-96)
extended the payroll tax rate reduction for the remainder of
2012 without offset. The payroll tax rate reduction expired
at the end of 2013. Budgetary offsets are contractionary—as
they either reduce spending or increase revenues. The degree
to which they are contractionary in the short term, however,
depends on design and the populations affected. For example,
having offsets occur after the period of economic weakness
has passed could limit short-term contractionary effects while
simultaneously promoting longterm fiscal sustainability. In
contrast, offsets that fall on individuals facing financial
constraints would be expected to have larger contractionary
effects. This report briefly discusses economic stimulus
considerations related to temporary payroll tax reductions.
In addition, as the Social Security trust fund is made whole
through a transfer from the general fund, select options to
offset this increase in the deficit will be examined to
illustrate how the choice of offsets can affect the net
amount of economic stimulus provided. For a discussion of
Social Security policy considerations concerning a temporary
payroll tax reduction, see CRS Report R41648, Social
Security: Temporary Payroll Tax Reduction, by Dawn Nuschler.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service Contents The Stimulus Effects of a
Temporary Reduction in Payroll Taxes
.................................................. 2 Timing
.......................................................................................................................................
2 Cost-Effectiveness
.....................................................................................................................
2 Consistency with Long-Term Fiscal Objectives
........................................................................
4 Tax Extenders
............................................................................................................................
4 Paying for a Temporary Payroll Tax Reduction: Options and
Considerations ................................ 5 Revenue
Options
.......................................................................................................................
6 High-Income Surtax
............................................................................................................
6 Limit Tax Expenditures
.......................................................................................................
7 Re-Index the Tax Code
........................................................................................................
9 Increase the Payroll Tax Wage Cap
.....................................................................................
9 Spending Options
....................................................................................................................
10 Freezing Federal Workers’ Salaries and Increasing Federal
Workers’ Retirement Contributions
..................................................................................................................
10 War Contingency Funds
....................................................................................................
11 Discretionary Spending
.....................................................................................................
12 Mandatory Spending
.........................................................................................................
12 Related Issues
................................................................................................................................
13 Tables Table 1. Distribution of Benefits from the
Two-Month Extension of the Payroll Tax Rate Reduction
......................................................................................................................................
5 Table 2. Potential Offsets for the Payroll Tax Rate
Reduction ......................................................
15 Contacts Author Contact
Information...........................................................................................................
17 Extending the Temporary Payroll Tax Reduction
Congressional Research Service 1 ocial Security is financed
by payroll taxes, which are paid by covered workers and their
employers.1 In the absence of a payroll tax reduction, employees
and employers would each pay 6.2% of covered earnings, up to
an annual limit, whereas self-employed individuals would pay
12.4% of net self-employment income, up to an annual limit.2
In December 2010, Congress temporarily reduced the employee and
self-employed shares by two percentage points (to 4.2% for
employees and 10.4% for the self-employed), with the Social
Security trust funds “made whole” by a transfer of general
revenue.3 The temporary reduction was scheduled to expire at
the end of 2011, but was extended for two months as part of the
Temporary Payroll Tax Cut Continuation Act of 2011 (P.L.
112-78). The temporary payroll tax rate reduction was
extended through the end of 2012 in the Middle Class Tax Relief
and Job Creation Act of 2012 (P.L. 112-96) and subsequently
allowed to expire at the end of 2012. As part of the
agreement on the Temporary Payroll Tax Cut Continuation Act of
2011, a conference committee was appointed to consider a
full-year extension of the payroll tax reduction. In addition
to an extension of the payroll tax rate reduction, the conferees
also considered a further extension of unemployment benefits4
and adjusting payments to doctors under Medicare.5 The
conference committee agreed to extend the payroll tax rate
reduction, emergency unemployment compensation, and physician
payments under Medicare. The final legislation, however, did
not fully pay for (or offset) these extensions. Whether to
provide a full-year extension was then debated among
policymakers. Concerns included those related to the
potential of the temporary reduction to endanger the Social
Security trust funds, signaling a departure from the
self-finance structure of Social Security, while increasing
the federal deficit. Supporters of an extension emphasized the
potential of an extension to stimulate the economy and the
general revenue “repay” as a way to counter concerns about
endangering the Social Security trust funds. However, the use of
offsets to reduce the budgetary cost of repaying the Social
Security trust funds would reduce the stimulative effect, though
the choice of offsets can influence the magnitude of the
reduction. This report briefly discusses economic stimulus
considerations related to temporary payroll tax reductions
and efforts to offset the budgetary cost of an extension. For a
discussion of Social Security policy considerations
concerning a temporary payroll tax reduction, see CRS Report
R41648, Social Security: Temporary Payroll Tax Reduction, by
Dawn Nuschler. 1 See CRS Report R42035, Social Security
Primer, by Dawn Nuschler for more information on the Social
Security program. 2 The Social Security trust funds are
also credited with tax revenues from the federal income taxes
paid. 3 The temporary reduction was enacted as part of The
Jobs Creation Act of 2010 (P.L. 111-312). The provision was
itself a partial extension and modification of a temporary
reduction enacted as part of the HIRE Act (P.L. 111-147). For
more on the topic, see CRS Report R41648, Social Security:
Temporary Payroll Tax Reduction, by Dawn Nuschler. 4 For
additional background, see CRS Report RL34340, Extending
Unemployment Compensation Benefits During Recessions, by
Julie M. Whittaker and Katelin P. Isaacs. 5 CRS Report
R40907, Medicare Physician Payment Updates and the Sustainable
Growth Rate (SGR) System, by Jim Hahn and Janemarie Mulvey.
S Extending the Temporary Payroll Tax Reduction
Congressional Research Service 2 The Stimulus Effects of a
Temporary Reduction in Payroll Taxes6 Short-term fiscal
stimulus measures aim to boost economic activity primarily
through increases in the demand for goods and services.7 The
goal of these measures is to break a cycle of decreasing
output leading to decreasing employment, resulting in lower
consumption and leading to further decreases in output.
Without stimulative policies the economy would eventually
stabilize and recover, but recovery would take longer and the
overall disruption to the economy would be greater.8 The
Congressional Budget Office (CBO), in testimony before Congress,
has identified three key criteria for assessing proposals to
stimulate the economy.9 The criteria are timing,
costeffectiveness, and consistency with long-term fiscal
objectives. The following sections evaluate the payroll tax
rate reduction using these criteria. Timing Effective
short-term stimulus should happen during the period of economic
weakness. In addition, since recessions are historically
short lived, effective stimulus should normally also be short
lived.10 An extension of the reduction in payroll taxes could
be implemented quickly and be designed to expire as the
economy strengthens. The resulting increase in household income
would be experienced quickly, as well. A modification of the
reduction in payroll taxes, through either a greater
reduction or an expansion to employer contributions, could be
similarly designed. Cost-Effectiveness Effective
short-term stimulus maximizes the increase in output and
employment per dollar of budgetary cost. The effectiveness of
a policy aimed at households would then depend upon the
fraction of additional income spent (as opposed to saved) on
goods and services relative to the lost federal revenue.
Provisions targeted at low-income individuals or the unemployed
should be more cost-effective than broad tax rate reductions,
as those facing financial constraints are more 6 See CRS
Report R41034, Business Investment and Employment Tax Incentives
to Stimulate the Economy, by Thomas L. Hungerford and Jane G.
Gravelle for a discussion of the effectiveness of other selected
policy options to stimulate the economy. 7 In addition,
existing programs often termed “automatic stabilizers” provide a
measure of stimulus aimed at reducing the severity of an
economic downturn in the absence of new stimulative measures.
Examples of these programs are unemployment insurance and the
Supplemental Nutrition Assistance Program (SNAP, formerly known
as Food Stamps). 8 Testimony of Congressional Budget
Office Director Douglas W. Elmendorf before the Committee on the
Budget, U.S. House of Representatives, The State of the
Economy and Issues in Developing an Effective Policy Response,
January 29, 2009. 9 Ibid. 10 Congressional Budget Office,
Policies for Increasing Economic Growth and Employment in 2012
and 2013, November 2011,
http://www.cbo.gov/doc.cfm?index=12437. Extending the
Temporary Payroll Tax Reduction Congressional Research
Service 3 likely to fully spend any additional disposable
income. In addition, theory suggests small recurring
increases in income may be more likely to be spent than a
similarly sized (in total) lump sum payment, but the
empirical evidence to support this is weak.11 An extension of
the reduction in payroll taxes would not be targeted to those
facing the greatest financial constraints, but the increase
in disposable income would take the form of a small recurring
increase. CBO estimated that a temporary reduction of payroll
taxes would raise output cumulatively in the next two years
by $0.10 to $0.90 per dollar of total budgetary cost and would
increase employment by between one and nine jobs per million
dollars of budgetary cost.12 These estimates assume that the
majority of the increase in disposable income would be saved or
used to pay down debt rather than spent on goods and
services. Compared with other household tax reductions, an
extension of the reduction in payroll taxes may be a
cost-effective stimulus—though well-targeted direct spending may
be still more costeffective. 13 According to CBO estimates,
the short-term stimulative effect of an extension of the
reduction in payroll taxes would be greater than the stimulative
effects from extending the Bush Tax Cuts,14 on par with a
one-year AMT patch,15 and less than an increase in refundable
tax credits.16 Expanding the reduction in payroll taxes to
include employer contributions—as proposed in S. 1660 and S.
1917—would be expected to provide a slightly greater degree of
stimulus per unit of budgetary cost than an employee-side
reduction, according to CBO.17 The policy could encourage
hiring by temporarily reducing the cost of labor. However, other
evidence suggests that subsidies provided on the employer
side, whether to subsidize hiring or investment, may be
relatively ineffective, because employers are unlikely to
hire in the absence of increased demand.18 The
cost-effectiveness of this policy would ultimately depend on
firms’ responses to the incentive. 11 See CRS Report RS21126,
Tax Cuts and Economic Stimulus: How Effective Are the
Alternatives?, by Jane G. Gravelle for a discussion of this
literature and Jonathan Parker et al., “Consumer Spending and
the Economic Stimulus Payments of 2008,” NBER Working Paper
No. 16684, January 2011, for a discussion on consumer spending
from the 2008 economic stimulus payments. 12 Congressional
Budget Office, Policies for Increasing Economic Growth and
Employment in 2012 and 2013, November 2011,
http://www.cbo.gov/doc.cfm?index=12437. 13 See CRS Report
RS21136, Government Spending or Tax Reduction: Which Might Add
More Stimulus to the Economy?, by Marc Labonte for
information on the relative stimulative value of alternative
fiscal policy levers. 14 See CRS Report R42020, The 2001 and
2003 Bush Tax Cuts and Deficit Reduction, by Thomas L.
Hungerford for information on the Bush Tax Cuts. 15 An AMT
(Alternative Minimum Tax) patch would effectively provide a
cumulative inflation adjustment to the amount of income
exempt from the AMT, reducing the number of taxpayers subject to
the AMT. See CRS Report RL30149, The Alternative Minimum Tax
for Individuals, by Steven Maguire for information on the
Alternative Minimum Tax. 16 See CRS Report R41999, The
Impact of Refundable Tax Credits on Poverty Rates, by Margot L.
Crandall-Hollick for information on refundable tax credits
and their effect on poverty. 17 Congressional Budget Office,
Policies for Increasing Economic Growth and Employment in 2012
and 2013, November 2011,
http://www.cbo.gov/doc.cfm?index=12437. 18 See CRS Report
R41034, Business Investment and Employment Tax Incentives to
Stimulate the Economy, by Thomas L. Hungerford and Jane G.
Gravelle for a full discussion. Extending the Temporary
Payroll Tax Reduction Congressional Research Service 4
Consistency with Long-Term Fiscal Objectives Effective
short-term stimulus should not hinder long-term fiscal
sustainability. An extension of the reduction in payroll
taxes, by itself, adds to short-term budget deficits. The
two-month reduction was estimated to increase the deficit by
$20.8 billion.19,20 Extending the two percentage point
payroll tax reduction through the end of 2012 is estimated to
cost $93.2 billion.21 By themselves, these proposals would be
at odds with the long-term goal of deficit reduction and may
signal to some a lack of resolve to reduce deficits to
investors.22 To address long-term fiscal objectives, some
proposals to extend or expand the temporary reduction in
payroll taxes include one or more offsets to reduce or eliminate
the net budgetary cost of the proposals. These offsets are,
by definition, contractionary as they either cut spending or
raise taxes.23 As enacted, the extension of the payroll tax rate
reduction was not offset. Tax Extenders Dozens of other
temporary tax provisions expired at the end of 2011.24 Whether
further extension of other expiring tax provisions should be
included in a payroll tax rate was an issue of debate.
Ultimately, no other expiring or expired tax provisions were
extended as part of the legislation extending the payroll tax
rate reduction through the end of 2012. Many of these provisions
were extended through the end of 2013 by the American
Taxpayer Relief Act of 2012 (P.L. 112-240). Expired tax
provisions lead to uncertainty for businesses and individual
taxpayers. Furthermore, the potential for tax incentives to
influence behavior, often the goal of tax policy, is diminished
when expired tax incentives are reinstated retroactively. One
challenge posed by the potential inclusion of tax extenders
in a payroll tax rate reduction extension is the cost of
extending these expired provisions. The Joint Committee on
Taxation has estimated that extending these other expiring
provisions for one year, through December 31, 2012, would cost
$36.9 billion over the 2012 through 2021 budget window.25
This figure does not include the cost of extending the
payroll tax rate cut. This figure also does not include the cost
of extending first-year bonus depreciation, which would cost
an estimated $21.1 billion over the 2012 through 2021 budget
window, or the cost of adjusting the Alternative Minimum Tax
(AMT) exemption amount for inflation, which is estimated to
cost $119.6 billion over the 10-year budget window. 19 Joint
Committee on Taxation, Estimated Revenue Effects Of The Revenue
Provisions Contained In The “Temporary Payroll Tax Cut
Continuation Act Of 2011,” JCX-57-11, December 23, 2011. 20
The 12-month extension and expansion provided by S. 1917, which
includes employer-side payroll tax rate reductions, has been
preliminarily estimated to cost $265 billion. 21 See U.S.
Congress, Joint Committee on Taxation, Estimated Revenue Effects
Of The Revenue Provisions Contained In The Conference
Agreement for H.R. 3630, committee print, 112th Cong., February
16, 2012, JCX-17-12,
http://www.jct.gov/publications.html?func=startdown&id=4399.
22 See CRS Report R40770, The Sustainability of the Federal
Budget Deficit: Market Confidence and Economic Effects, by
Marc Labonte for information on the sustainability of the
federal budget deficit. 23 See CRS Report R41849, Can
Contractionary Fiscal Policy Be Expansionary?, by Jane G.
Gravelle and Thomas L. Hungerford for more information. 24
See CRS Report R42105, Tax Provisions Expiring in 2011 and “Tax
Extenders,” by Molly F. Sherlock. 25 See U.S. Congress, Joint
Committee on Taxation, Estimated Revenue Effects of an Extension
of Certain Expiring Provisions Through December 31, 2012,
December 7, 2011, #11-1 167. Extending the Temporary Payroll
Tax Reduction Congressional Research Service 5 Paying for
a Temporary Payroll Tax Reduction: Options and Considerations
Extending the two percentage point payroll tax reduction through
the end of 2012 cost an estimated $93.2 billion.26 In
considering a further extension of the payroll tax reduction,
many proposals include some form of budgetary offset. The use
of offsets is not, however, universal, as the Temporary
Payroll Tax Cut Continuation Act of 2012 (H.R. 4013), introduced
on February 13, 2012, did not contain any offsets.
Ultimately, costs associated with the extension of the payroll
tax rate reduction as enacted in the Middle Class Tax Relief and
Job Creation Act of 2012 (P.L. 112-96) were not offset.
Offsets that reduce spending, or increase revenues, are
contractionary.27 While offsets address the issue of
long-term fiscal sustainability, depending on design, they can
diminish the short-term stimulative effects of the tax cut.
Having offsets occur after the period of economic weakness has
passed could limit short-term contractionary effects while
simultaneously promoting long-term fiscal sustainability.
In addition to the aggregate economic impacts of the offset,
there are distributional effects. The percentage increase in
after-tax income and the percentage decrease in average federal
tax liability is greater for low- and middle-income
taxpayers, as compared to the highest-income taxpayers (see
Table 1). Offsets that reduce income or benefits to low- and
middle-income earners, or offsets that otherwise increase
taxes, could diminish the potential benefit of the payroll
tax rate reduction for affected groups. Table 1. Distribution
of Benefits from the Two-Month Extension of the Payroll Tax
Rate Reduction Tax Units With Tax Cut All Tax Units Cash
Income Percentile Percent of Total Taxpayers
Receiving Benefit Average Tax Cut Under Two-
Month Extension Average Tax Cut Percent Change in
After-Tax Income Percent Change in Average
Federal Tax Rate Lowest Quintile 55.4 $27 $15 0.2 -0.2
2nd Quintile 75.4 $69 $52 0.2 -0.2 3rd Quintile 83.5 $123
$103 0.3 -0.2 4th Quintile 88.3 $216 $191 0.3 -0.2 Highest
Quintile 90.4 $377 $341 0.2 -0.1 All 75.7 $153 $116 0.2 -0.2
26 This is in addition to the $20.8 billion estimated cost of
the two month payroll tax cut extension enacted in P.L. 112-
78. See U.S. Congress, Joint Committee on Taxation, Estimated
Revenue Effects Of The Revenue Provisions Contained In The
Conference Agreement for H.R. 3630, committee print, 112th
Cong., February 16, 2012, JCX-17-12,
http://www.jct.gov/publications.html?func=startdown&id=4399.
27 See CRS Report R41849, Can Contractionary Fiscal Policy Be
Expansionary?, by Jane G. Gravelle and Thomas L. Hungerford
for more information. Extending the Temporary Payroll Tax
Reduction Congressional Research Service 6 Tax Units With
Tax Cut All Tax Units Cash Income Percentile Percent of
Total Taxpayers Receiving Benefit Average Tax Cut
Under Two- Month Extension Average Tax Cut
Percent Change in After-Tax Income Percent Change
in Average Federal Tax Rate 90th–95th 92.0 $409 $376
0.3 -0.2 95th–99th 90.0 $422 $380 0.2 -0.1 Top 1 Percent
88.8 $446 $396 0.0 0.0 Source: Tax Policy Center, Table
T12-0006, Temporary Payroll Tax Cut Continuation Act of 2011,
Available at
http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=3259.
Notes: Cash income percentile breaks in 2011 dollars are as
follows: 20% $17,130; 40% $34,174; 60% $62,042; 80% $104,401;
90% $169,059; 95% $216,085; 99% $569,944. Average federal taxes
include income taxes, payroll taxes, and the estate tax. Unit
of analysis is the taxpayer. Revenue Options One option
for offsetting the cost of extending the reduced payroll tax
rate is to raise additional revenues. Some of the options
discussed below have been proposed as part of payroll tax rate
reduction legislation. Other options have been proposed by the
Obama Administration, or have been part of comprehensive
deficit reduction plans. These options represent a few of the
dozens of policy options for raising additional revenues to
finance an extension of reduced payroll tax rates.28 The
revenues that could be generated using the different options
discussed below are summarized in Table 2. Since the revenue
options discussed below were not included in either the
House-passed or Senate-passed versions of H.R. 3630, paying for
an extension of the payroll tax rate cut extension with
additional revenues would have required conferees to consider
measures that were not previously included in H.R. 3630. The
final version of the Middle Class Tax Relief and Job Creation
Act of 2012 (P.L. 112-96), as enacted on February 22, 2012, did
not include any of the revenue options discussed below.
High-Income Surtax A specific option for raising revenues to
pay for an extension of the temporary two percentage point
payroll tax reduction is a high-income surtax. There have been
several proposals to levy a high-income surtax in the 112th
Congress. The American Jobs Act of 2011 (S. 1660) would levy a
5.6% high-income surtax on those with modified adjusted gross
income in excess of $1 million ($500,000 for married
individuals filing separate tax returns). This surtax would
raise an estimated $452.7 billion over the 2012 through 2021
budget window.29 28 The Congressional Budget Office (CBO)
regularly issues a compendium of budget options to Congress. The
most recent Budget Options volume contains more than 100
options for altering federal spending and revenues, most of
which would reduce the budget deficit. See Congressional Budget
Office, Reducing the Deficit: Spending and Revenue Options,
Washington, DC, March 2011,
http://www.cbo.gov/ftpdocs/120xx/doc12085/03-10-ReducingTheDeficit.pdf.
29 See Letter from Douglas W. Elmendorf, Director, Congressional
Budget Office, to Honorable Harry Reid, Senate Majority
Leader, October 7, 2011,
http://www.cbo.gov/ftpdocs/124xx/doc12471/s1660.pdf.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service 7 A high-income surtax was also proposed in
Senate legislation seeking to extend and expand the payroll
tax rate reduction. The Middle Class Tax Cut Act of 2011 (S.
1917) proposed a 3.25% surtax on modified adjusted gross
income above $1 million ($500,000 for married individuals
filing separate tax returns). Imposing a 3.25% surtax on those
earning in excess of $1 million would generate an estimated
$267.5 million over the 2012 through 2021 budget window.30
Imposing a surtax on high-income individuals could partially
address concerns that some highincome individuals pay lower
average tax rates than some middle-income earners.31 In 2006,
65% of taxpayers with incomes over $1 million paid an average
tax rate lower than those with less than $100,000 in taxable
income. High-income taxpayer benefits from the payroll tax
rate reduction are also limited. The 2012 wage cap is
$110,100, meaning that the 12.4% OASDI payroll tax is suspended
for earnings above this threshold. High-income taxpayers
would receive a maximum benefit of $2,202 under a one-year,
two percentage point payroll tax rate reduction. As a larger
share of income is earned above the wage cap, benefits from
the payroll tax rate reduction would be diminished. If,
however, high-income earners were more likely to save payroll
tax rate reduction benefits, rather than spend these
benefits, recapturing these benefits through a high-income
surtax would be less likely to dampen the stimulative impact
of the payroll tax rate reduction. One concern that has been
raised regarding a high-income surtax is the potential effect on
small businesses. However, very few tax returns reporting
business income (roughly 1%) report adjusted gross income in
excess of $1 million.32 Offsetting a temporary payroll tax
reduction through a high-income surtax would mean that the
costs associated with a tax benefit received by many would be
paid for by a limited group. Nearly 76% of taxpayers
benefitted from the two-month extension of the temporary payroll
tax rate reduction (see Table 1). In 2009, 0.22% of tax
returns filed had an adjusted gross income of at least $1
million.33 Limit Tax Expenditures Individual income tax
expenditures reduce income tax revenues by roughly $1 trillion
annually.34 Thus, scaling back or eliminating certain tax
expenditures could result in additional revenues. As
examples, the Congressional Budget Office has estimated that
gradually eliminating the mortgage interest deduction would
result in an estimated $214.6 billion over the 2012 through 2021
budget window.35 Limiting the deduction for state and local
income taxes to 2% of adjusted gross income 30 Joint
Committee on Taxation, Estimated Budget Effects of the “The
Middle Class Tax Cuts Act of 2011,” November 28, 2011. 31
For further discussion of this issue, and analysis of this
claim, see CRS Report R42043, An Analysis of the “Buffett
Rule,” by Thomas L. Hungerford. 32 CRS Report R42043, An
Analysis of the “Buffett Rule,” by Thomas L. Hungerford and
Treasury Report:
http://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/OTA-T2011-04-Small-Business-
Methodology-Aug-8-2011.pdf. 33 Internal Revenue Service, 2010
Data Book, Washington, DC, 2010,
http://www.irs.gov/pub/irs-soi/10databk.pdf. 34 U.S.
Congress, Senate Committee on the Budget, Tax Expenditures:
Compendium of Background Material on Individual Provisions,
committee print, prepared by Congressional Research Service,
111th Cong., 2nd sess., December 2010, S. Prt. 111-58, p. 12.
35 Congressional Budget Office, Reducing the Deficit: Spending
and Revenue Options, Washington, DC, March 2011,
(continued...) Extending the Temporary Payroll Tax Reduction
Congressional Research Service 8 (AGI) would raise an
estimated $629.3 billion over the 2012 through 2021 budget
window. Limiting charitable contributions such that only
contributions in excess of 2% of AGI would be deductible
would raise $219 billion over the 2012 through 2021 budget
window. Another option for limiting tax expenditures would be
to limit the value of tax expenditures for higher-income
taxpayers. The Obama Administration has proposed limiting the
value of itemized deductions to 28%.36 This proposal would
reduce the value of itemized deductions for taxpayers in the
33% and 35% bracket in 2012.37 Limiting the value of itemized
deductions to 28% would raise an estimated $293.3 billion
over the 2012 through 2021 budget window.38 Limiting the
value of itemized deductions to 28% would increase the
progressivity of the income tax system by increasing taxes
paid by those at the upper end of the income distribution. For
2011, the 33% income tax rate applies to taxable income above
$212,300 for married filers ($174,400 for single filers).39
In 2009, the top 2% of returns filed were in the 33% or 35% tax
brackets.40 Estimates suggest that limiting the value of
itemized deductions to 28% would leave tax liability
unchanged for those with less than $200,000 in income.41
Taxpayers with cash incomes between $200,000 and $500,000
would see income taxes increase by 0.1%, on average. For
taxpayers with cash incomes between $500,000 and $1 million,
average federal tax rates would increase by an estimated
0.4%, while average federal tax rates would increase by an
estimated 0.6% for those with cash incomes in excess of $1
million. Similar to a high-income surtax, limiting itemized
deductions to offset an extension of the payroll tax rate
reduction would lead to an increased tax burden on the highest
incomes. The higher tax burden, however, would result from
scaling back the value of certain tax subsidies, which
currently provide a greater benefit to higher-income taxpayers.
(...continued) pp. 146–147. 36 Department of the Treasury,
General Explanations of the Administration’s FY2012 Revenue
Proposals, Washington, DC, February 2011, p. 148,
http://www.treasury.gov/resource-center/tax-policy/Documents/General-Explanations-
FY2012.pdf. 37 Under current law, the top two marginal tax
rates are scheduled to increase to 36% and 39.6% in 2013. Thus,
the 28% limitation for itemized deductions would apply to
taxpayers in these two tax brackets beginning in 2013
(assuming the top marginal tax rates increase as scheduled under
current law). 38 U.S. Congress, Joint Committee on Taxation,
Estimated Budget Effects Of The Revenue Provisions Contained In
The President’s Fiscal Year 2012 Budget Proposal, committee
print, 112th Cong., March 17, 2011, JCX-19-11,
http://www.jct.gov/publications.html?func=startdown&id=3773.
39 For 2011, the 35% tax rate applies to taxable income above
$379,150, regardless of filing status. 40 Internal Revenue
Service, Statistics of Income, Table 3.4, available at
http://www.irs.gov/taxstats/indtaxstats/article/
0,,id=133521,00.html. 41 Tax Policy Center, T10-0064,
available at
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2655.
Changes in tax liability are reported relative to the current
policy baseline. Using a current law baseline would result in
larger increases in tax liability from limiting itemized
deductions to 28%. See Tax Policy Center, T10-0062, available
at
http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2653&DocTypeID=1.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service 9 Re-Index the Tax Code Another option
for raising additional revenues is to modify how tax code
parameters are adjusted for inflation. Current price level
measures may overstate actual levels of inflation.42 A modified
measure of inflation that more accurately reflects changes in
the price level would change how provisions in the tax code,
such as the standard deduction, personal exemptions, earned
income and child tax credits, and IRA contribution limits, as
well as tax brackets, are indexed for inflation. A
re-indexing of the tax code was included in the deficit
reduction packages presented by the President’s Fiscal
Commission and the Debt Reduction Task Force.43 The Joint
Committee on Taxation (JCT) has estimated that indexing the tax
code for inflation using a chained consumer price index (CPI)
would generate $59.6 billion in additional revenues over the
2012 through 2021 budget window.44 Applying a chained CPI to
the tax code would result in increased tax liability for
taxpayers at all income levels. Moderate income taxpayers
(those with cash incomes between $30,000 and $40,000) would
see average tax rates increase 0.3%.45 Higher-income taxpayers
(those with cash incomes between $100,000 and $200,000) would
see average tax rates increase 0.2%. For taxpayers with
incomes in excess of $1 million, tax rates would not increase,
on average.46 Like the benefits of the reduced payroll tax
rate, the additional tax burden imposed by re-indexing the
tax code using a chained CPI is spread across the income
distribution. Enacting a re-indexing of the tax code
immediately could offset some of the stimulus provided by the
payroll tax rate reduction. Much of the additional revenues,
however, will be generated over time. Allowing the
re-indexing to go into effect later in the budget window would
postpone this contractionary effect, and would also reduce
the revenues generated from the policy as measured within the
10-year budget window. Increase the Payroll Tax Wage Cap
Another option for raising additional revenues is to increase
the social security payroll tax base.47 For 2012, Social
Security payroll taxes apply to the first $110,100 in wage
income. In recent years, roughly 83% of employment earnings
fell below the Social Security wage cap.48 42 See CRS Report
RL32293, The Chained Consumer Price Index: What Is It and Would
It Be Appropriate for Cost-of- Living Adjustments?, by Linda
Levine. 43 See CRS Report R41641, Reducing the Budget
Deficit: Tax Policy Options, by Molly F. Sherlock. 44 Joint
Committee on Taxation, June 29, 2011,
http://democrats.waysandmeans.house.gov/media/pdf/112/6-
29ResponseChainedCPI.pdf. 45 Tax Policy Center, Table
T11-0233, available at
http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=
3104&DocTypeID=1. The figures reported above are relative to the
current policy baseline. For figures relative to the current
law baseline, see Tax Policy Center, Table T11-0221, available
at http://www.taxpolicycenter.org/numbers/
displayatab.cfm?Docid=3102&DocTypeID=1 46 The average
increase in taxes paid for those with cash incomes of more than
$1 million is $1,104. This increased tax liability relative
to overall tax liability is small, such that the increase in
average tax rates is less than 0.05%. 47 See CRS Report
RL33943, Increasing the Social Security Payroll Tax Base:
Options and Effects on Tax Burdens, by Thomas L. Hungerford.
48 Congressional Budget Office, Reducing the Deficit: Spending
and Revenue Options, Washington, DC, March 2011, pp. 169-170.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service 10 When payroll taxes were first collected
in 1937, 92% of earnings were covered. Over time, the share
of covered earnings has fluctuated, falling below 80% in the
1960s. Legislation enacted in the late 1970s increased the
tax base such that 91% of earnings were covered in 1983. Since
the share of covered earnings has been allowed to decline
since the 1980s, one option for raising additional revenues
is to increase the share of total earnings subject to the Social
Security payroll tax to 90%.49 Like re-indexing the tax code,
increasing the Social Security wage base was included in the
deficit reduction plans presented by the President’s Fiscal
Commission and the Debt Reduction Task Force.50 CBO
estimates suggest that increasing the Social Security payroll
tax base to cover 90% of earnings would have a net revenue
impact of $456.7 billion over the 2012 through 2021 budget
window.51 Increasing the Social Security payroll tax cap
would increase the tax burden on upper-middle income
taxpayers. For taxpayers with earnings above the current payroll
tax cap of $110,100, enacting this option would offset some
of the benefits associated with the payroll tax rate
reduction. This measure would make the payroll tax less
regressive, and over the longer term, improve the fiscal
outlook of the Social Security trust fund. Spending Options
The revenue cost associated with extending the payroll tax rate
reduction could also be offset with spending reductions. Two
specific options that have been discussed as possible offsets
for a payroll tax rate reduction extension are reductions in
federal worker compensation and war contingency funds. The
options of reducing spending are also discussed in the context
of discretionary and mandatory spending. The specifics of
potential spending reductions are beyond the scope of this
report. The revenue impacts of some of the specific proposals
discussed below are summarized in Table 2. Freezing
Federal Workers’ Salaries and Increasing Federal Workers’
Retirement Contributions The House-passed version of H.R.
3630 would extend the current freeze on statutory pay
adjustments for federal employees for one year, through December
31, 2013.52 The House-passed version of H.R. 3630 would
reduce the discretionary spending limits enacted under the BCA
to achieve these savings. The CBO estimated that the
provisions related to discretionary spending in the
House-passed versions of H.R. 3630 would reduce spending by
$26.2 billion over 2011 through 2021 budget window.53 49
This would increase the Social Security wage cap to $170,000 in
2012. 50 See CRS Report R41641, Reducing the Budget Deficit:
Tax Policy Options, by Molly F. Sherlock. 51 Enacting this
option would result in a change in outlays of $11.1 billion over
the 10-year budget window, while total revenues would
increase by an estimated $467.8 billion over 10 years. 52
Civilian pay increases were forgone for 2011 and 2012 as part of
the Continuing Appropriations and Surface Transportation
Extensions Act of 2011 (P.L. 111-322). 53 Congressional
Budget Office, Effects on Revenues and Direct Spending of H.R.
3630, the Middle Class Tax Relief and Job Creation Act of
2011, Adjusted for the Enactment of H.R. 3765, the Temporary
Payroll Tax Cut Continuation Act of 2011, January 6, 2012,
http://www.cbo.gov/ftpdocs/126xx/doc12661/hr3630.pdf.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service 11 Legislation introduced in the Senate, the
Temporary Tax Holiday and Government Reduction Act (S. 1931),
also proposed extending the current federal employee pay freeze,
through 2015. The Congressional Budget Office estimated that
under S. 1931, discretionary spending would be reduced by
$221.8 billion over the 2012 through 2021 budget window.54 This
savings comes from provisions that would freeze federal
workers’ salaries, reduce the size of the federal workforce,
and reduce the discretionary spending caps as enacted under the
Budget Control Act of 2011 (BCA; P.L. 112-25). Another
option for raising revenue by reducing federal civilian employee
pay would be to reduce the amount of the annual pay
adjustment as established under the Federal Employees Pay
Comparability Act of 1990 (FEPCA; P.L. 101-509). Reducing the
annual across-the-board adjustment expected to occur under
FEPCA by 0.5 percentage points would reduce outlays by $50.3
billion over the 2012-2016 budget window.55 The conference
committee agreement on H.R. 3630, enacted as the Middle Class
Tax Relief and Job Creation Act of 2012 (P.L. 112-96),
included provisions to increase pension contributions of
newly hired federal employees. Provisions agreed to in the
conference agreement do not affect current federal workers’
pension contributions, benefits, or compensation. The federal
employee pension provisions enacted in P.L. 112-96 are
expected to generate $15.5 billion in additional revenues
over the 2012 through 2022 budget window.56 Freezing federal
worker pay or reducing annual pay adjustments for federal
workers would offset the benefits of the payroll tax rate
reduction for a targeted group of wage earners. Regions with
high concentrations of federal employees may receive less
stimulative benefit from the payroll tax if a large
proportion of employees have the payroll tax rate reduction
offset through reduced wages. Trading future reductions in
federal worker salaries for current revenue losses from a
payroll tax rate reduction could make it more difficult for the
federal government to recruit and retain highly qualified
employees with technical and professional skills over the longer
term. War Contingency Funds Another option for offsetting
the revenue cost associated with the payroll tax rate reduction
extension is to use savings from overseas contingency funds. In
developing the budget baseline, the CBO assumes that
discretionary spending grows with inflation. Thus, spending on
Overseas Contingency Operations (OCO) is projected to grow
over time. For FY2012, an adjustment of $126.5 billion was
made to the discretionary spending cap set under the BCA for
OCO.57 Testimony presented by the CBO before the Joint Select
Committee in October 2011, based on budget figures from the
continuing resolution, projected the cost of 54 Congressional
Budget Office, Budgetary Effects for S. 1931, the Temporary Tax
Holiday and Government Reduction Act, December 1, 2011,
http://www.cbo.gov/ftpdocs/125xx/doc12578/s1931.pdf. 55
Additional analysis of this option, along with a discussion of
some of the potential policy concerns, can be found in
Congressional Budget Office, Reducing the Deficit: Spending and
Revenue Options, Washington, DC, March 2011, p. 126. 56
Letter from Douglas Elmendorf, Director, Congressional Budget
Office, to Honorable David Camp, Chairman, Committee on Ways
and Means, February 16, 2012,
http://cbo.gov/ftpdocs/127xx/doc12764/hr3630.pdf. 57
Congressional Budget Office, Final Year Sequestration Report for
Fiscal Year 2012, Washington, DC, January 12, 2012,
http://www.cbo.gov/ftpdocs/126xx/doc12670/01-12-Sequestration.pdf.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service 12 overseas contingency operations over the
2012 through 2021 budget window at $1.3 trillion.58 If the
drawdown in overseas military operations continues as expected,
fewer funds will be needed for overseas contingency
operations, resulting in budgetary savings relative to the CBO
baseline. This option was not used to offset the payroll tax
rate reduction extension as enacted in the Middle Class Tax
Relief and Job Creation Act of 2012 (P.L. 112-96).
Discretionary Spending Legislation in the 112th Congress has
constrained anticipated growth in discretionary spending. The
BCA included statutory caps on discretionary spending that
resulted in $917 billion in savings over the 2012 through
2021 budget window.59 The BCA also established the Joint Select
Committee on Deficit Reduction, tasked with finding an
additional $1.5 trillion in deficit reduction over the
10-year budget window. Failure of the Joint Select Committee to
propose deficit reduction legislation has led to an automatic
spending reduction process. Under this process, an additional
$1.1 trillion will be cut from the deficit over the 2013 through
2021 budget window.60 Of this $1.1 trillion, $813 billion is
from reduced discretionary spending ($492 billion for
defense, $322 billion nondefense).61 CBO’s adjusted March
2011 baseline projected discretionary spending of $11.0 trillion
over the 2013 through 2021 budget window. Projected
discretionary spending under the BCA caps and automatic
spending reductions is $9.4 trillion over the same time period.
Thus, discretionary spending projections have been reduced by
nearly 15% through BCA provisions. Offsetting the payroll tax
rate reduction extension using discretionary spending cuts would
require further reductions. Spending reductions are typically
contractionary, implying that spending cuts enacted while the
economy is still weak could offset the stimulative effect of the
payroll tax rate reduction. Mandatory Spending Several
payroll tax rate reduction extension bills proposed limiting
certain federal benefits, including unemployment
compensation, benefits under the Supplemental Nutrition
Assistance Program (SNAP), and Medicare, based on income.
Measures to eliminate unemployment compensation for certain
individuals based on income were included in the Temporary
Tax Holiday and Government Reduction Act (S. 1931), the Middle
Class Tax Cut Act of 2011 (S. 1944), and the Middle Class Tax
Relief and Job Creation Act of 2011 (H.R. 3630), as
introduced on December 9, 2011. In all cases, the legislation
sought to limit or eliminate unemployment compensation for
very high-income individuals. These three bills also sought
to limit SNAP (formerly known as food stamps) for very
high-income individuals. CBO 58 The 2012 budget used to make
this projection was $119 billion. Since the budgeted amount for
2012 overseas contingency operations has increased, these
projects are lower than what current CBO projections are likely
to predict. See testimony before the Joint Select Committee
on Deficit Reduction, Discretionary Spending, 112th Cong.,
October 26, 2011,
http://www.cbo.gov/ftpdocs/124xx/doc12490/10-26-DiscretionarySpending_Testimony.pdf.
59 CRS Report R42013, The Budget Control Act of 2011: How Do the
Discretionary Caps and Automatic Spending Cuts Affect the
Budget and the Economy?, by Marc Labonte and Mindy R. Levit.
60 While the BCA established a goal of $1.2 trillion in deficit
reduction, the CBO has estimated that the actual savings from
this process will be $1.1 trillion. 61 Another $171 billion
is from reduced mandatory spending, while $169 billion is from
change in debt-service costs. Extending the Temporary Payroll
Tax Reduction Congressional Research Service 13 estimates
that the unemployment compensation and SNAP provisions contained
in H.R. 3630 would generate $0.1 billion over the 2012
through 2021 budget window.62 Two of the three aforementioned
pieces of legislation contained provisions that would require
high-income individuals to pay higher Medicare premiums (S. 1931
and H.R. 3630). CBO has estimated that provisions in H.R.
3630 to adjust the calculation of Medicare premiums and
increase premiums for high-income beneficiaries would raise
$31.0 billion over the 2012 through 2021 budget window.63
The conference committee agreement on H.R. 3630, and the Middle
Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96)
as enacted on February 22, 2012, did include several health
offsets. In total, the health care offsets that change direct
spending as enacted in P.L. 112-96 are estimated to raise
$18.2 billion over the 2012 through 2022 budget window.64 The
offsets as enacted do not increase Medicare premiums for
higher-income individuals. Generally, reducing spending
(mandatory or discretionary) will tend to have a contractionary
impact. Reducing mandatory spending through reductions in
benefits for high-income individuals could have a
contractionary impact if individuals reduce consumption to
purchase services that were previously provided through the
government. Alternatively, if high-income individuals instead
purchase services out of savings, maintaining current
consumption levels, the short-term contractionary impacts
will be reduced. Related Issues A number of other issues
were considered alongside an extension of the payroll tax rate
reduction. The Temporary Payroll Tax Cut Continuation Act of
2011 (P.L. 112-78) also provided a temporary extension of
emergency unemployment compensation and a temporary readjustment
of physicians’ Medicare reimbursements. These provisions were
extended in the Middle Class Tax Relief and Job Creation Act
of 2012 (P.L. 112-96). Lawmakers also considered including
provisions that would extend the 100% bonus depreciation
allowance to promote investment.65 Extending the 100% bonus
depreciation allowance would generate revenue losses. To
avoid increasing the deficit, the cost of extending policies
such as an extension of the 100% bonus depreciation allowance
would require a budgetary offset. Ultimately, an extension of
the 100% bonus depreciation allowance was not enacted as part of
the Middle Class Tax Relief and Job Creation Act of 2012
(P.L. 112-96). 62 Letter from Douglas W. Elmendorf, Director,
Congressional Budget Office, to Honorable Dave Camp, Chairman,
Committee on Ways and Means, December 9, 2011,
http://www.cbo.gov/ftpdocs/126xx/doc12609/hr3630.pdf. 63
Letter from Douglas W. Elmendorf, Director, Congressional Budget
Office, to Honorable Dave Camp, Chairman, Committee on Ways
and Means, December 9, 2011,
http://www.cbo.gov/ftpdocs/126xx/doc12609/hr3630.pdf. 64
Letter from Douglas Elmendorf, Director, Congressional Budget
Office, to Honorable David Camp, Chairman, Committee on Ways
and Means, February 16, 2012,
http://cbo.gov/ftpdocs/127xx/doc12764/hr3630.pdf. 65 For more
information, see CRS Report RL31852, Section 179 and Bonus
Depreciation Expensing Allowances: Current Law, Legislative
Proposals in the 112th Congress, and Economic Effects, by Gary
Guenther. Extending the Temporary Payroll Tax Reduction
Congressional Research Service 14 In addition to the issues
mentioned in this report, legislation to extend the temporary
payroll tax rate reduction has included provisions related to
a number of other policy issues. Several of these issues are
noted below (links to relevant CRS reports provided as
footnotes): • Environmental Protection Agency (EPA)
regulations related to the Maximum Achievable Control
Technology (MACT) standards for boiler and solid waste
combustion units;66 • flood insurance reform;67 • spectrum
reallocation and assignment and emergency communications;68 and
• Keystone XL pipeline project.69 66 See CRS Report R41459,
EPA’s Boiler MACT: Controlling Emissions of Hazardous Air
Pollutants, by James E. McCarthy. 67 See CRS Report
R40650, National Flood Insurance Program: Background,
Challenges, and Financial Status, by Rawle O. King. 68 See
CRS Report R40674, Spectrum Policy in the Age of Broadband:
Issues for Congress, by Linda K. Moore and CRS Report R41842,
Funding Emergency Communications: Technology and Policy
Considerations, by Linda K. Moore. 69 See CRS Report
R41668, Keystone XL Pipeline Project: Key Issues, by Paul W.
Parfomak et al. and CRS Report R42124, Proposed Keystone XL
Pipeline: Legal Issues, by Adam Vann, Kristina Alexander, and
Kenneth R. Thomas. CRS-15 Table 2. Potential Offsets for
the Payroll Tax Rate Reduction (billions of dollars) 2012
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10-year
Extension of Payroll Tax Rate Reduction through 12/31/12a
-74.8 -24.6 -99.5 Revenue Options High-Income Surtax
(5.6%)b 1.0 28.5 25.5 44.4 49.2 53.3 57.1 60.6 64.6 68.6 452.7
High-Income Surtax (3.25%)c 0.8 18.1 13.4 26.3 29.1 31.5 33.7
35.9 38.2 40.6 267.5 Limit Tax Expenditures to 28%d 3.8 20.3
25.3 27.7 30.3 32.8 35.2 37.3 39.3 41.3 293.3 Re-Index the
Tax Codee 0.0 0.6 1.9 4.1 5.7 6.6 7.7 9.5 11.3 12.4 59.6
Increase the Payroll Tax Wage Capf 8.6 39.8 40.4 43.8 47.5 49.6
52.0 55.7 58.6 60.8 456.7 Spending Options Increase
Pension Contributions of Newly Hired Federal Employees (as
enacted in P.L. 112-96)g 0.0 0.1 0.3 0.6 0.9 1.3 1.6 2.0 2.4
2.8 3.3 15.5 Freeze Federal Workers’ Salaries and Reduce
Discretionary Spending Caps under the BCA (H.R. 3630)h 0.0
1.2 2.3 2.8 3.0 3.2 3.3 3.4 3.5 3.6 26.2 Freeze Federal
Workers’ Salaries and Reduce Discretionary Spending Caps
under the BCA (S. 1931)i 0.0 6.6 15.1 22.2 25.7 28.2 29.3
30.2 31.6 32.9 221.8 Reduce Annual Across-the-Board Pay
Adjustments for Federal Employees by 0.5 Percentage Pointsj
0.0 0.7 1.8 2.9 4.1 5.3 6.6 8.1 9.6 11.1 50.3 Limit
Unemployment and SNAP Benefits for High- Income Earnersh
(i) (i) (i) (i) (i) (i) (i) (i) (i) (i) 0.1 Adjust Medicare
Premiums and Increase Premiums for High-Income Beneficiariesh
0.0 0.0 0.0 0.0 0.0 2.2 4.1 4.7 8.6 11.4 30.1 Source: All
revenues estimates provided by the Joint Committee on Taxation
or the Congressional Budget Office. Notes: Rows may not sum
due to rounding. An (i) indicates less than $50 million.
CRS-16 a. This is in addition to the $20.8 billion estimated
cost of the two month payroll tax cut extension enacted in P.L.
112-78. See U.S. Congress, Joint Committee on Taxation,
Comparison Of The Estimated Revenue Effects Of The Revenue
Provisions Contained In H.R. 3630, As Passed By The House Of
Representatives And Amended By The Senate, committee print,
112th Congress, January 11, 2012, JCX-3-12,
http://www.jct.gov/publications.html?func=startdown&id=4382.
b. As proposed in S. 1660. For the revenue estimate, see Letter
from Douglas W. Elmendorf, Director, Congressional Budget
Office, to Honorable Harry Reid, Senate Majority Leader,
October 7, 2011,
http://www.cbo.gov/ftpdocs/124xx/doc12471/s1660.pdf. c. As
proposed in S. 1917. For the revenue estimate, see Joint
Committee on Taxation, Estimated Budget Effects of the “The
Middle Class Tax Cuts Act of 2011,” November 28, 2011. d.
As proposed in the President’s FY2012 budget proposal. For the
revenue estimate, see U.S. Congress, Joint Committee on
Taxation, Estimated Budget Effects Of The Revenue Provisions
Contained In The President’s Fiscal Year 2012 Budget Proposal,
committee print, 112th Congress, March 17, 2011, JCX-19-11,
http://www.jct.gov/ publications.html?func=startdown&id=3773.
e. Applying chained CPI to the tax code. For the revenue
estimate, see Joint Committee on Taxation, June 29, 2011,
http://democrats.waysandmeans.house.gov/media/
pdf/112/6-29ResponseChainedCPI.pdf. f. As presented in the
CBO Budget Options. For the revenue estimate, see Congressional
Budget Office, Reducing the Deficit: Spending and Revenue
Options, Washington, DC, March 2011, pp. 169-170. g.
Letter from Douglas Elmendorf, Director, Congressional Budget
Office, to Honorable David Camp, Chairman, Committee on Ways and
Means, February 16, 2012,
http://cbo.gov/ftpdocs/127xx/doc12764/hr3630.pdf. h. As
proposed in H.R. 3630. For the revenue estimate, see
Congressional Budget Office, Effects on Revenues and Direct
Spending of H.R. 3630, the Middle Class Tax Relief and Job
Creation Act of 2011, Adjusted for the Enactment of H.R. 3765,
the Temporary Payroll Tax Cut Continuation Act of 2011, January
6, 2012,
http://www.cbo.gov/ftpdocs/126xx/doc12661/hr3630.pdf. i. As
proposed in S. 1931. For the revenue estimate, see Congressional
Budget Office, Budgetary Effects for S. 1931, the Temporary Tax
Holiday and Government Reduction Act, December 1, 2011,
http://www.cbo.gov/ftpdocs/125xx/doc12578/s1931.pdf. j. As
presented in the CBO Budget Options. For the revenue estimate,
see Congressional Budget Office, Reducing the Deficit: Spending
and Revenue Options, Washington, DC, March 2011, p. 126.
Extending the Temporary Payroll Tax Reduction Congressional
Research Service 17
Back to Index |