Hawaii Would See $800 Million Tax Break if Payroll Tax Cut Extended
As Congress how to pay for extending a federal tax break set to expire Dec. 31, the White House is touting the potential benefits to middle-class families in a new report released Wednesday.
The says the current 2 percentage-point reduction in employees’ portion of the Social Security tax “is providing a significant benefit to workers in every state” this year. The payroll tax holiday gives the average family an extra $1,500 annually.
In Hawaii, 700,000 residents will collectively have seen an estimated $500 million in tax relief this year under the tax holiday, according to the U.S. Department of the Treasury’s Office of Tax Policy.
Nationally, working families will see a total of $109 billion in tax relief, which the White House says supports economic growth and job creation.
Part of President Barack Obama’s proposed includes extending the tax cut and slashing the employee rate in half from 6.2 percent to 3.1 percent of the first $110,100 of taxable wages earned in 2012.
Under that plan, 700,000 Hawaii residents would get a collective $800 million tax break next year — or an average $1,143, almost double the current average for Hawaii.
On average, workers would see about a 2 percent boost to their after-tax income.
During a conference call Wednesday, Jason Furman, deputy director of the president’s National Economic Council, said the expansion and extension of the tax cut would “really make a difference” between an economy that remains stagnant and one “that’s growing fast enough to start bringing unemployment down.”
Locally, the Hawaii Council on Revenues cited the tax holiday when it revised higher its forecast for real personal income for calendar year 2011.
Read the full to see state-by-state estimates.
