Republicans reject Democrats' payroll tax plan, cite small business concerns

Senate Republicans recently rejected Democrats' fifth attempt in the past two months to reduce Social Security payroll taxes, saying the proposal could hurt small businesses.

Senate Majority Leader Harry Reid called the Democrats' trimmed bill "a serious proposal with meaningful concessions." A key difference was the removal of a tax break for employers' first $5 million in wages, which reduced the cost of the proposal by more than $100 billion. The so-called millionaires tax - a surtax on citizens who earn more than $1 million - remained, although the rate of taxation was reduced from 3.25 percent to 1.9 percent.

Republicans argued that the tax would hit small business job creators hard, which would be detrimental to the growth of the sector and ultimately the economy.

"The inclusion of the small-business tax hike is a poison pill that shows Senate Democrats are aiming to fail," an aide to House GOP leaders told The Wall Street Journal.

Representative Jeffrey Landry, a Louisiana Republican, recently introduced an alternative proposal that would allow employees to choose whether they want to receive the tax break. Those who opt in would extend their retirement age by a month to offset the lost tax revenue.