Tuesday December 06, 2011 | 09:11 AM

As promised when she became the sole GOP senator last week to vote in favor of raising taxes on millionaires to pay for a Social Security payroll tax cut extension, Sen. Susan Collins of Maine today is unveiling a bipartisan payroll tax cut extension bill that also advertises itself as a “jobs bill.”

Collins and Sen. Claire McCaskill, D-Mo., this afternoon will hold a news conference to talk about their proposal to extend the payroll tax cut into 2012, paying for it with a surcharge on people making more than $1 million but exempting small businesses. Collins said last week that she preferred a "carve out" for small business owners impacted by the surcharge, calling them "job creators," but was willing to vote for the Senate Democrats' bill because it offered a payroll tax cut for employers that would help offset the surcharge.

(Updated as of 150: p.m.: Collins and McCaskill said at the Capitol Hill news conference that they hoped their legislation would be the basis, eventually, of a bipartisan accord. Senate Minority Leader Mitch McConnell, R-Ky., later told reporters he would not back an extension that raises taxes. But Collins told reporters later that she was encouraged that the GOP leader backs the concept of an extension and said she had not expected an immediate endorsement of her bill. See a more detailed update below)

While the failed Senate Democrats’ bill that Collins backed featured a 3.25 percent surcharge, the Collins-McCaskill bill has a 2 percent “carve out” for small businesses. Instead of expanding this year’s payroll tax cut that cut the rate from 6.2 percent to 4.2 percent to 3.1 percent, as proposed in last week’s measure, Collins’ bill maintains the two percent cut for another year. But Collins’ bill also allows the tax cut to apply to the first 10 million of an employer’s payroll, more than the $5 million in the Senate Democrats’ bill last week, and it also ends some tax breaks for major oil companies.

It isn’t clear whether Senate Democratic leaders will go for the proposal, which is more than just an extension of the payroll tax cut and contains some regulatory overhaul proposals opposed by a number of Senate Democrats.

They are backing a revised version of last week’s bill that continues to expand the tax cut to a 3.1 percent rate for 2012 but gets rid of the employer’s payroll tax cut. It is paid for with a lower surcharge, 1.9 percent, on millionaires but also with fees charged to lenders by the government-backed mortgage companies Fannie Mae and Freddie Mac.

In addition to the payroll tax extension, Collins and McCaskill propose spending $10 billion on a one-time allocation to a Department of Transportation loan and grant program to states that could be used to establish state “infrastructure banks” to help leverage private investment dollars. And the bill would provide $25 billion in additional spending on highway and bridge building and repair programs, on top of $40 billion ain federal dollars for that purpose already handed out for 2012.

But the bill also contains some ideas not endorsed by many Democrats, including a version of Collins’ bill delaying the implementation of federal rules for limiting emissions from industrial boilers. 

(Updated as of 1:50 p.m.: Collins said at the news conference that every weekend in Maine she hears a common refrain: that Mainers are tired of partisan gridlock, particularly when it comes to efforts to create jobs and heal the economy. And McCkaskill said that the two lawmakers often pass each other in the hall and talk about how all that gridlock drives them crazy and what they can do about it.

Collins and McCaskill acknowledged that while Democratic and GOP leaders know about their legislation they have not yet signed off on it. But Collins said she hoped the “carve out” for small businesses – which she said is designed to capture only active small business owners not passive investors – would attract more GOP votes. McCaskill touted a proposal in the bill to also spend more on transportation projects as attractive to Democrats.

Collins said the bill’s overall cost has not yet been “scored” by the Congressional Budget Office, but she said that of 392,000 Americans who filed income tax returns last year who earned more than $1 million, 13 percent of them were small business owners who filed business income under a personal income tax return and would be protected by the exemption. The surcharge would be for 10 years, long enough to accumulate the revenues needed to pay for the one-year tax break and transportation spending in the bill.

Collins said that she believes some type of payroll tax cut extension will be approved before the current one expires Dec. 31. Mainers “Want us to work together, they want us to work across the aisle and come up with a bipartisan jobs plan,” Collins said.

Some Republicans, however, have questioned whether the payroll tax cut generates much in the way of an economic spark. Others have opposed the surcharge on millionaires.

Senate Minority Leader Mitch McConnell, R-Ky., said today that a compromise on the payroll tax cut extension “does not run through tax hikes.”)

(Updated as of 4:30 p.m.: Collins said told reporters this afternoon she is not discouraged by McConnell's stance on the payroll tax cut extension and using tax hikes on millionaires to help pay for it. McConnell also spoke of that stance in front of Collins when those two and other Republicans reiterated their opposition to the nomination of Richard Cordray to be director of the newly created Consumer Protection Finance Bureau, not on the basis of opposing Cordray's qualifications but because most Republicans say they don't like the way the bureau is structured, including its budget being exempt from congressional approval.

Collins said that she focused on McConnell's endorsement of the payroll tax extension itself.

“To be fair to Sen. McConnell, what I heard him say very clearly was that he did not think that we should allow the payroll tax reduction to expire at the end of the year," Collins said. "Some in our caucus do think it should be allowed to expire at the end of the year, but I’m encouraged that Sen. McConnell believes that it should be extended and that is obviously a key provision of my bill. Obviously I don’t expect the leader to endorse the bill today. We have a long ways to go before we get to a solution. But he stated very clearly that the payroll tax relief should not be allowed to expire and I think that’s a good sign.”

 

 

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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.
Kevin can be reached at 317-6256 or kmiller@mainetoday.com

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