In an effort to avoid the partisan bickering that marred its consideration of these issues just before Christmas, both the House and Senate passed the Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630) on Feb. 17. President Obama signed the bill into law without fanfare, extending the current payroll tax cut and unemployment insurance benefits for the long-term unemployed on Feb. 22.
In brief, the legislation includes a number of provisions of interest to HR practitioners:
- Payroll taxes will remain at 4.2 percent (down from their regular rate of 6.2 percent) through the end of 2012;
- Unemployment benefits would be extended through Dec. 31, 2012, and reduce the maximum number of claimable weeks to 73 (from 99) for individuals residing in states with an unemployment rate above 9 percent, and would cap benefits at 63 weeks for individuals in states with a unemployment rate at or below 9 percent and;
- Medicare reimbursements for physicians (aka the “Doc Fix”) will remain the same, preventing a scheduled rate cut.
Lawmakers on both sides of the aisle made concessions regarding the length of unemployment benefits, as well as how to offset the roughly $150 billion price tag for extending these programs through the fiscal and calendar years. Congress will now have to deal with these programs, as well as the various tax rate and other tax cuts also set to expire at the end of the year. Considering the current economic conditions and the enormous federal deficit, legislators will likely square off again later this year — likely in a lame duck session after the November elections — when they once again will need to decide how best to pay for these programs or let them expire.