I agree with AJ Strata at The Strata-Sphere. Why the heck are we even referring to the “Bush tax cuts?” Sure, we can do that when referring to what happened after the tax cuts in 2001 and 2003, but at this point – eight to 10 years later – any change to the tax code during the lame-duck session or with the new Congress should be referred to as the Obama Tax Increases.
Congress adjourned recently without taking any action on the income tax rates applicable for 2011. As it stands now, everyone, not just the “rich” will see a larger chunk of their salary removed from their paychecks beginning January 1.
Here’s the problem. Traditionally, by mid November the IRS issues the tax withholding tables that employers must use for the following calendar year. That is not likely to happen this year. Congress is not scheduled to reconvene until November 15, and will recess shortly thereafter for Thanksgiving. In the Senate, at least, there are several non tax issues that will be considered, leaving little if any time to deal with taxes. Any delay past December 1 will make it virtually impossible for many employers to update their payroll systems to reflect the 2011 tax rates.
According to Dennis Danilewicz, director of payroll for New York University’s Langone Medical Center, and recent president of the American Payroll Association,
[i]t takes large employers three to four weeks to process and test these changes, and the government needs time before that to determine and publish [the withholding tables]…[and] large firms often run payrolls a week or two ahead of time…
So, as they say, time is of the essence.
Lawmakers’ recent track record on dealing with tax matters doesn’t inspire confidence that they will act with dispatch. Congress has yet to resolve the estate tax, which expired at the end of last year and is set to snap back to high rates come January. Nor has it tackled the alternative minimum tax for 2010, a levy that is set to hit 32 million taxpayers this year, compared with five million last year.
The IRS can’t simply assume what Congress will do, and issue withholding tables in accordance with that assumption. And, even if Congress leaves all of the current tax rates in place,
there are enough differences between 2010 and 2011 numbers, such as inflation adjustments, that payroll executives still need weeks to update and test their systems.
When January 1 rolls around and and the inevitable incorrect amounts are withheld from people’s paychecks, we will no doubt hear that the mess was created by the Republicans, the “party of no”. But, don’t believe it.
For the past 18 months the House, the Senate and the Oval Office have been controlled by the Democrats. They could have done, and in fact did do, virtually anything they wanted…see: Obamacare, the Stimulus Bill, the Financial Reform Bill. To have done nothing about taxes when that issue was a part of President Obama’s 2008 campaign promises is a complete dereliction of duty.
The real reason nothing was done was that many Democrats said no, and refused to raise taxes on anyone during “the worst economic times since the Great Depression”.
Under the circumstances, can you blame them?
OK. I know you think this is a joke. But it’s not. It’s called re-branding. You know, Newer, bigger, with special enzyme dirt fighting yada, yada, etc, etc. Again this is not a test. Watch the video for yourself. Read more
This would be funny were it not for the fact that those proposing this legislation are actually serious.
We all know that come January 1 everyone’s taxes will rise substantially. The Obama administration, however, seems to be backing an extension of the Bush tax cuts except for the “wealthy”, who are currently defined as anyone making more than $250,000 per year. Most democrats in Congress seem to agree with the President, but not all.
Representative Jerrold Nadler (D. N.Y.), joined at the moment by 5 other House members from New York, is proposing legislation that would
require the IRS to adjust tax brackets proportionally in regions where the average cost of living is higher than the national average.
According to Representative Nadler,
[t]he basic costs of life in the New York region are much steeper than in most parts of the country…[i]t’s time for our tax code to take reality into account when assessing someone’s tax liability.
Humm…the basic costs of life in New York are higher due, in large part, to the ridiculously high taxes paid by New Yorkers in sales taxes, state and local income taxes, and property taxes. Those taxes make it more expensive for businesses in New York to produce goods and provide services, and those increased costs are passed on to New Yorkers.
But, in Representative Nadler’s view, it is perfectly acceptable for those in Orlando, Florida, for example, to pay more in federal income taxes so that rich New Yorkers get a tax break and remain in New York, thus letting New York continue its reckless spending and ever higher taxes.
Even more curious, though, is that it would appear that Representative Nadler hasn’t read the tax code. New Yorkers, rich or poor, already get a federal income tax break that is proportionally higher than those living in Orlando…they can deduct their high state income taxes, local income taxes and property taxes on their federal tax returns, whereas, Floridians can only deduct their relatively low (by comparison) property taxes.
All those in favor of further subsidizing New York, please raise their hands.