Tax breaks for all -- except some feds

Federal employees covered by the Civil Service Retirement System would not see a 2 percent “tax holiday” under a tax cut extension bill that the Senate passed today.

Under a compromise worked out between Republican congressional leaders and President Barack Obama, most people would get a decrease in the money held out of their paychecks, because the government for one year would reduce Social Security payroll taxes from 6.2 percent to 4.2 percent. However, because CSRS-covered feds don’t pay into the Social Security system -- they contribute to CSRS instead -- they would not get the break.

“NTEU believes this unequal treatment of federal employees is unfair, and urges that a one-year, 2 percent reduction in employee contributions to CSRS, or similar remedy, be included in any payroll tax holiday legislation,” National Treasury Employees Union President Colleen Kelley wrote in a letter to senators.

The Senate passed the bill by a vote of 81-19.

NTEU noted that those federal workers who would not receive the tax holiday will also be hit with the two-year pay freeze that Obama has proposed for the entire federal workforce. Federal workers covered under the Federal Employees Retirement System pay the same 6.2 percent of their pay into Social Security as is paid by private-sector workers and are covered under Social Security, Kelley said. They will receive the tax holiday if the bill is enacted into law, Kelley pointed out.

On a more positive note, the legislation does include language that would extend a $230 monthly transit subsidy for federal workers who commute to and from work on public transportation, Kelley said. Without the legislation, the subsidy was scheduled to revert back to $120 per month; the Senate bill would continue the extension of the higher subsidy for another year.