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The Impact of the 2011 Payroll Tax Cut on Working Americans

Wednesday, January 19, 2011  
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The Impact of the 2011 Payroll Tax Cut on Working Americans

It has been one month since the Tax Relief, Unemployment Reauthorization and Job Creation Act of 2010 was enacted and millions of American workers are already seeing the impact of the Act's payroll tax cut in their paychecks. By reducing the payroll tax paid by employees from 6.2% to 4.2%, the payroll tax cut is already providing a boost to workers' paychecks and to the economy. The expected benefits of this cut to the payroll tax include:

· $110 Billion in Tax Relief: The payroll tax cut is expected to provide $110 billion in tax relief to working Americans.

· Tax Cuts for 159 Million Workers: As a result of the payroll tax cut, some 159 million working Americans are expected to receive larger paychecks this year than they would otherwise.

· An Average Tax Cut of $695 Per Worker: The expected benefit received from the payroll tax cut is an average of $695 per worker.

· Payroll Tax Cut Would Have No Impact on Social Security Solvency: Each worker's Social Security benefit will be calculated without regard to the tax reduction and the Social Security trust fund will be made whole by transfers from the General Fund. Social Security's Chief Actuary wrote that the projected level of the Social Security trust fund would be unaffected by the payroll tax cut.

· Payroll Tax Cut Provides Significant Boost to Economy and Job Growth This Year: Independent economists have estimated that a payroll tax cut could provide a significant, immediate boost to growth and jobs.

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