Levin: Payroll tax extension could depend on Dec. jobs report

The most powerful Democrat on the House tax-writing committee said Thursday that a congressional push to extend a temporary payroll tax holiday is likely contingent on the unemployment rate in December.

As part of the looming "fiscal cliff," of automatic spending cuts and tax increases, a reduction of 2 percentage points in the payroll tax, adopted in 2010 and renewed in February, expires.

Democrats and Republicans appeared to be on the same page that the payroll tax holiday should expire earlier this year. 

Ways and Means Committee ranking member Sandy Levin (D-Mich.) told reporters that Democrats could push for an extension in the fiscal cliff talks. 

“I think that will be affected by the report, the first Friday of next month,” he said. 

The unemployment rate stands at 7.9 percent, according to the October jobs report issued by the Bureau of Labor Statistics on Nov. 2. The economy added 171,000 jobs in October, higher than expected.

The November numbers could fall in the wake of Superstorm Sandy.

“We would need to take a look at something that would further benefit the economy” if the numbers are bad, Levin said.

There has been some talk of replacing the payroll tax break with a revived Making Work Pay tax credit collected at the end of the tax year.

Rep. Patrick Tiberi (R-Ohio), a senior Ways and Means member, said that President Obama or top congressional Democrats such as Senate Majority Leader Harry Reid (Nev.) had so far stopped short of explicitly putting the payroll tax cut on the negotiating table.  

He acknowledged that there was a now good chance the tax break could now be part of fiscal cliff negotiations, however.