Schumer Reveals: Legislation on Senate Floor this Week Could Save Long Island Middle-Class Families more than $2500 in FICA Taxes - Senator Unveils New County-by-County Data with Expected Savings for Average Families

Press Release

Today, U.S. Senator Charles E. Schumer announced his support for legislation on the Senate floor this week that would save the average middle-class family on Long Island more than $2,500 on their taxes next year. The Middle Class Tax Cut Act of 2011 would extend and expand the payroll tax credit, set to expire at the end of the year, which has helped reduce the tax burden on middle-class families on Long Island by over $1,600 this year. If Congress fails to extend the payroll tax holiday, the average New York middle class family would see their taxes jump by that same amount in 2012. The bill that Schumer supports would save New Yorkers hundreds of millions of dollars on next year's taxes, and cut payroll taxes in half, from 6.2% to 3.1%, for approximately 440,000 businesses throughout the Empire State, helping them reinvest in their business and create new jobs. The legislation would not add to the deficit, as it is fully paid for by a small, 3.25% surcharge on the income taxes for income totaling over $1 million.

"Stretching the middle-class paycheck and giving businesses the breathing room to reinvest in their businesses and create new jobs is a no-brainer," said Schumer. "We need to stop this potential tax increase dead in its tracks, and to lighten the tax load on middle-class families, making it just a bit easier for them to send their kids to a good college, pay the weekly grocery bills, afford a decent home, and make their car payments. This bill would put over $2,500 right back into the pockets of hard-working Long Islanders, helping them to reinvigorate business and get our economy moving again. Both sides should come together and support a real tax cut that will make a big difference in the lives of millions of New York families."

For the past year, Long Island families have benefitted from a payroll tax holiday that averaged over $1600 $2,500 per family. Previously, employees had 6.2% of their wages deduced for Social Security taxes, but that number had been reduced to 4.2% for the current year. Without Congressional action, the payroll tax rate will increase back to the 6.2% level at the end of the year, causing a middle-class tax increase that could slow purchasing from local businesses and put a damper on the local economy. While unemployment has slowly begun to come down in most parts of the state, Schumer is pushing the Middle Class Tax Cut Act to reduce the rate to 3.1% for 10.3 10.1 million New Yorkers, helping further drive new economic growth on Long Island.

The Middle Class Tax Cut Act is supported by a wide range of economists, and includes a number of provisions to help jump-start the economy throughout New York. The legislation cuts the Social Security payroll tax paid by employers on the first $5 million of their taxable payroll for the coming year, which benefits 98% of businesses across the country. The bill also creates an incentive for businesses to hire new workers by eliminating the Social Security payroll tax paid by employers on new hires during the end of this year, and throughout 2012. If companies add additional workers during the last three months of the current year or any time next year, they would not pay any payroll taxes on those workers, up to payroll level increases of $12.5 million this quarter, or $50 million next year. The bill ensures that Social Security payments are not interrupted by transferring funds from the General Fund to the Social Security Trust Fund to eliminate the impact on outgoing payments caused by temporary payroll tax relief.

Middle-class families throughout New York would see a reduction in payroll taxes next year under this legislation. A full breakdown of the expected savings for the median family in each county is attached to this release, and a Long Island breakdown appears below:

· In Nassau County, the median middle-class family would save $2,859 in FICA taxes next year

· In Suffolk County, the median middle-class family would save $2,573 in FICA taxes next year

Without action, families at all income levels would see a dramatic rise in their taxes next year. A family with a combined income of $50,000 would see their taxes increase by $1,000, instead of saving $1,500 next year compared to the previous tax rate. A family earning $70,000 would lose their tax savings of $1,400, instead of saving $2,170 on next year's taxes. Finally, a family earning $90,000 in combined wages would see their taxes jump by $1,800 next year, instead of saving $2,790 at the 3.1% rate.

The legislation would also provide major tax savings for companies that hire and add to their payroll during the third quarter of 2011, or any time next year. If a local company hired 10 additional workers between now and the end of 2012, and paid each a salary of 50,000, the company would save $31,000 in payroll taxes under this legislation. If it hired 20 new employees next year at $40,000 per employee, they would save $49,600 in payroll taxes.

"It's clear we need to do more to kick-start the economy, and lowering the payroll tax is just what the doctor ordered," continued Schumer. "This plan would be a win-win for middle-class families and businesses throughout Long Island, and I'm going to push hard to get it done."

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