‘Temporary’ unemployment tax to expire – after 35 years

The end of the surtax comes as Democrats in Washington are trying to balance the need to reduce the deficit and stimulate the economy. 

For instance, President Obama stressed in a Wednesday news conference that he was interested in extending a payroll tax holiday for another year. The current one-year holiday, included in last year’s tax cut-compromise, is estimated by the Congressional Budget Office to eat into the revenue stream by $112 billion over the next two years.

{mosads}At the same time, Democrats are also pushing for certain tax expenditures – such as for corporate jets, yachts and the horse racing industry – to be eliminated as part of a deficit-reduction deal to raise the $14.3 trillion debt ceiling before the Aug. 2 deadline. 

According to the Ways and Means GOP release, the surtax set to expire, which was enacted to replace revenues used to pay unemployment benefits, raised roughly $73 billion over the years. More than 60 percent of those revenues, the panel said, came after the money used for the benefits had been paid back.

Still, the surtax has had its supporters in Washington – both President Obama and former President George W. Bush proposed extending it, with Obama calling to keep the surtax for good in his 2012 budget.