Date: December 28, 2011
The President Signs H.R. 3765
The “Temporary Payroll Tax Cut Continuation Act of 2011”
On December 23, 2011, President Obama signed H.R. 3765, the “Temporary Payroll Tax Cut Continuation Act of 2011,” which became Public Law 112-78. The bill was introduced on December 23, and passed by unanimous consent in both chambers. The law extends the current payroll tax cut for two months and is similar to H.R. 3630, the “Temporary Payroll Tax Cut Continuation Act of 2011,” as passed by the Senate on December 17.
- Section 101 of the law amends the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (Public Law 111-312). It extends, through February 2012, the 2-percentage point reduction in the Social Security payroll (or self-employment) tax rate applicable to employees and the self-employed that applied for 2011. For any tax year beginning in 2012, the tax cut is limited to the sum of a taxpayer’s wages up to $18,350. For self-employment, the revised tax rate is limited to the amount of self-employment income up to $18,350. For taxpayers with both wages and self-employment earnings, the revised tax rate is limited to the sum of wages and self-employment income up to $18,350.1
- As with the provision that is currently in effect for 2011, the amount of revenue that is foregone to the Social Security Trust Funds because of the extension of this payroll tax reduction will be replaced with General Fund transfers of the same amount. Thus, the projected level of OASI and DI Trust Funds will be unaffected by the enactment of this bill.
1 The limit of $18,350 is 2/12 of the $110,100 taxable earnings limit for 2012.