Mitch McConnell Says Congress Will Likely Extend Tax Cut One More Year

GOP to push for payroll tax cut extensions, but disagrees with Dems on how to pay for it.

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Congress will "in all likelihood" pass a payroll tax cut extension before the year is out, the top Senate Republican said Tuesday, but he is still dead-set against the Democrats' proposed millionaire tax hike to pay for it. Senate Minority Leader Mitch McConnell, speaking to reporters Tuesday afternoon, said that the GOP will unveil its own proposal soon.

"In all likelihood we will agree to continue the current payroll tax cut for another year," McConnell said. "We believe it should be paid for."

The Senate will likely vote Thursday on a measure which would extend, and expand, the payroll tax cut passed last year. The Democrat-crafted package would reduce the payroll tax for workers to 3.1 percent, and would also set the payroll tax for employers to the same rate and offer them additional benefits to hire workers. The rates would revert back to 6.2 percent in 2013.

The difference would be made up by a 3.25 percent "surtax" on income over $1 million per year, which has been blasted by the GOP as a politically motivated provision designed only to create opposition by Republicans and will only hurt its chances for passage.

Republicans have been cool to the idea of extending the payroll tax cut, but have been careful not to be on the side of wholesale opposition.

"The payroll tax holiday has not stimulated job creation. We do not think that is a great way to do it," Arizona Sen. Jon Kyl, the second-ranking Republican in the Senate, told Fox News on Sunday. For GOP rank-and-file members and activists, the desire to oppose the president's agenda conflicts with their traditional desire to see taxes lowered.

One conservative, small-government activist says he likely wouldn't oppose a "clean" extension, unpaid for by further tax hikes, but felt it offered only a tiny benefit to the economy.

But Tuesday's statement by McConnell was the first time the GOP leadership clearly said they wanted to keep the payroll tax cut—but likely, there will be plenty of argument between Democrats and Republicans on how to pay for it. Democrats also want to expand the cut, while Republicans, so far, have just advocating keeping the current rates for another year.

Twitter: @AlexParkerDC