House GOP payroll tax plan includes federal pay freeze, retirement changes

Friday - 12/9/2011, 7:02pm EST

By Jack Moore
Federal News Radio

House Republicans have unveiled their plan for extending the payroll tax cut, including proposals to extend a federal pay freeze and restructure federal employees' retirement.

The House bill, "The Middle Class Tax Relief and Job Creation Act," which was introduced by House Speaker John Boehner (R-Ohio), offsets the cost of extending the payroll tax cut with a number of provisions, including those affecting federal workers.

The introduction of the House bill comes a day after the Senate blocked a similar payroll tax extension, backed by Republicans, that also would have frozen federal pay.

Details of the House bill:

  • The bill would extend the current two-year federal pay freeze through 2013.

  • Beginning in January 2013, federal employees' pension contributions would increase by 0.5 percent annually, until it reaches 2.3 percent in 2015.

  • The bill creates a new category — new hires with less than five years of federal service. Their pension contribution would increase by 3.2 percent.

  • For new hires, the bill would also change the salary calculation for annuities to the highest five years of service, rather than the current highest three years of service.
As with the earlier Senate version, federal unions denounced the plan .

"Actions like freezing pay and cutting the jobs of other middle-class workers to offset this tax reduction completely eliminate any positive impact on our struggling economy," said National Treasury Employees Union President Colleen Kelley.

American Federation of Government Employees President John Gage called the House proposal "even more draconian," than a similar measure introduced in the Senate last week, which was blocked Thursday from coming to a vote for a second time.

In a statement, Boehner said his proposal would "extend pro-growth tax relief for businesses of all sizes while advancing several bipartisan measures that will directly support the creation of private-sector jobs."

The Senate bill, theTemporary Tax Holiday and Government Reduction Act, would have extended the federal pay freeze for three additional years and cut 200,000 federal civilian positions through attrition.

As for the House version, President Barack Obama previously said he would veto the bill because of provisions relating an oil pipeline with Canada.

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