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Wednesday November 30, 2011 | 10:59 AM

The Obama administration says the Social Security payroll tax cut put a total of $400 million in the pockets of 800,000 Mainers this year – and that figure would be upped to $700 million next year under a proposal by Senate Democrats to extend and expand the tax cut.

The state-by-state figures released this morning by the Treasury Department are part of a White House push to extend the tax cut, which expires Dec. 31, for another year. They were released on the same day that President Obama visits Scranton, Pa., to make a pitch for the payroll tax cut extension and as Senate Democrats plan a test vote later this week designed to put pressure on Republicans.

In all, the Treasury Department says in its analysis, the payroll tax cut nationally provided “a total $109 billion tax relief to support economic growth and job creation in 2011.”

The cut this year slashed the payroll tax from 6.2 percent to 4.2 percent. That saved a family with $50,000 of income about $1,000.

Now, Senate Democrats want to cut the payroll tax further for 2012, to 3.1 percent, which they say would save that same family about $1,500 and spur spending to boost the economy. The payroll tax cut extension also applies to employers – on the first $5 million of an employer’s payroll – which Democrats say would encourage more hiring.

Democrats would pay for payroll tax cut by imposing a 3.25 percent surcharge on the income taxes paid by people making more than $1 million. A number of Republicans, including Sens. Susan Collins and Olympia Snowe of Maine, say they favor extending the tax cut, but don’t agree it should be paid for with the Senate Democrats’ proposed surcharge.

However, Collins told reporters on Capitol Hill Tuesday that she might be willing to compromise on the issue if Senate Democrats agreed to exempt small business income from the surcharge on the income taxes paid by millionaires.

Senate Minority Leader Mitch McConnell, R-Ky., says Republicans will go along with the payroll tax cut extension but not with the surcharge. He hasn’t yet offered up a promised alternative method to keep the tax cut extension from adding to the deficit.

 

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Kevin Miller is Washington bureau chief for the Portland Press Herald and MaineToday Media. He has worked as a journalist in Maine for 6 ½ years, covering the environment, politics and the State House. Before arriving in Maine, he wrote about politics, government and education for newspapers in Virginia and Maryland.
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