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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
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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.
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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.
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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.
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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.
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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.
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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...)
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(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.
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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.
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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.
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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.
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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.
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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.
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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.
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