Schumer says limiting stimulus to those who pay income tax is unfair
WASHINGTON -- Any rebate included in an economic stimulus plan should include people who pay Social Security taxes, not just those who pay income taxes, a leading Democratic lawmaker said Sunday.
"If we did the rebate based on the payroll tax, it would hit a lot more people at a lower end of the spectrum. And so to just say income taxes are the only taxes we're considering that people pay is unfair," said Charles Schumer, the New York lawmaker who is chairman of the congressional Joint Economic Committee. People making $35,000 to $50,000 pay a lot of federal taxes, he said, but much of that is not income tax, but directed to programs like Social Security.
Democrats and the Bush administration say they want to reach a quick agreement so the economic stimulus can be applied quickly to the struggling economy. But any Democratic insistence on covering those who don't pay income tax could be a cause of conflict.
The White House, for now, envisions providing one-time rebate checks to people who pay federal income taxes. That would leave out millions of the working poor, who do not make enough to pay income taxes but do pay Social Security and Medicare payroll taxes.
Families of four earning less than $24,900 a year would not get a rebate under the White House approach, said Chad Stone, chief economist at the Center on Budget and Policy Priorities, a research group that focuses on how government programs affect the poor and middle class.
He has estimated that about 22 million households file income tax returns but do not pay that tax because their earnings are so low. An additional 22 million households do not file a return, he said. This group includes many older people on fixed incomes, he said.
Treasury Secretary Henry Paulson has said Bush "is focused on broad-based tax relief for those who are paying taxes." Paulson said that worked in 2001 and 2003.
The centerpiece of an economic aid plan should be a tax cut for the middle class, and the overall proposal could include relief for business and spending incentives for the unemployed, Schumer said.
"I'm not going to draw any lines in the sand," said Schumer. But he said any plan that does not carefully balance help for people making less than $50,000 with relief for those making $200,000 or more "doesn't make much sense from either a fairness or economic point of view."
President Bush and Democrats in Congress have expressed an interest in working together to pass a plan quickly that could help the struggling economy. Schumer agreed on the need for fast action.
"Partisan fights and dithering could only make whatever recession we're going to have worse," Schumer said. "There's a real spirit of compromise in Washington right now, a spirit of let's get together, put away the bipartisan differences, because the economy is in poor shape."
Schumer said that in a balanced plan, "the centerpiece would be a tax cut for the middle class and working families, and the bookends might be some business tax cuts as well as some spending stimuli for, say, people who are unemployed."
The lawmaker appeared on "Fox News Sunday."