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Rob Peter to pay Paul on payroll

 

 

Take VO: Enjoy your final 2011 paychecks. They might not be as big next year if Congress doesn't approve an extension of the payroll tax holiday.

This year, workers have had 4 point 2 percent of their pay taken out for Social Security. That tax rate is scheduled to return to 6 point 2 percent on New Year's Day 2012.

The Obama administration says the lower tax rate means that on average each worker gets about a thousand dollars or more a year.

While most Republicans and Democrats agree that the lower tax is a good thing, they disagree on where that extra money will come from.

Take SOT: Kay Bell, Tax Editor, Bankrate.com (1:20-1:47)

"The Democrats want to tax millionaires. They want to put a 3.25% surtax on people who make more than a million dollars. And the Republicans are holding firm to their no-new-taxes pledge, so they've offered other ways to pay for, which include: reducing federal employees and cutting down on some federal employee benefits, changing Medicare - changing the Medicare program slightly."

Since 2012 is an election year, they'll probably find a compromise, but not until the very last minute.

To keep up to date on this and other tax matters, visit Bankrate.com. I'm Kay Bell.

 

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