US House Votes Down Payroll-Tax Extension Plan
Republicans demanded immediate negotiations with the Senate on a year-long extension of the measure.
Without an agreement, payroll taxes will rise for 160 million workers from next month.
Unlike other budget battles this year on Capitol Hill, the latest one has exposed Republican divisions.
It caps a year of partisan confrontations that sent the US to the brink of a first-ever default, prompted a historic credit-rating downgrade, and risked partial shutdowns of the federal government.
The plan voted down by the House on Tuesday was passed 89-10 by Democrats and Republicans in the Senate at the weekend.
Senate Democratic Leader Harry Reid is rejecting calls for talks from Republicans, who were initially reluctant to extend the tax break.
The proposal is part of the jobs plan put forward by President Barack Obama, who is postponing a family holiday to Hawaii until a deal is reached.
Senate Republican Leader Mitch McConnell had expressed optimism that the House would approve the deal.
But in closed-door meetings on Monday night, conservative Republicans reportedly rallied against the deal.
The lawmakers likened themselves to the rebel Scots in the movie Braveheart, according to the Washington Post.