President Obama's plan to create jobs would provide a tax cut for 160 million workers by expanding the payroll tax cut from 2 percent this year to 3.1 percent in 2012.
For a typical family earning $50,000 a year, this cut would translate to an extra $1500 a year in their pockets. That's more than $125 a month for households to pay for gas, food, and other expenses. On the other hand, if Republicans block passage of the President's payroll tax cut, the typical family making $50,000 a year would see their taxes rise by $1,000 next year.
Businesses, too, will benefit from the payroll tax cut. Approximately 98 percent of businesses will see their payroll tax bill cut in half -- from 6.2 percent to 3.1 percent -- on their first $5 million in wages. The President's proposal also includes a full payroll tax holiday for firms that add workers or increase wages.
This means that a construction firm with a payroll last year of $500,000 hires two new workers and adds $80,000 in payroll would receive a tax cut of $20,460. A warehouse with a payroll last year of $7 million hires 40 new workers and adds $2 million in payroll would receive a total tax cut of $279,000.
Use our calculator to find out how your bottom line will be impacted