To those of you still questioning the severity of allowing the Bush tax cuts to expire, let me say that unprecedented interference by the Treasury Department is a bad sign. Officials usually release tax-withholding tables, which determine your take-home pay, by mid-November to provide payroll executives with ample time for system adjustments. Unfortunately, payroll processors cannot do their jobs if Congress fails to provide them with 2011 tax rates.
I mentioned that Congressional leadership deliberately punted a pre-election tax cut vote to avoid potential political retaliation. The earliest they would take up the expiring package is November 15, but even that’s optimistic when you consider the holidays and various other non-tax items on the legislative agenda. If Congress doesn’t act, it will force the Treasury to step in and take matters into its own hands. But what does that mean for you?
The Wall Street Journal ran an article, entitled “Delays to Tax Tables May Dent Paychecks,” that says Treasury officials may implement a short-term grace period that maintains current levels. The problem is that taxpayers could end up owing a substantial amount of money at the end of the year if Congress chooses not to extend certain provisions. Keep those savings in tact! Another option, which WSJ claims is the most “obvious,” would be to publish tables that assume full expiration of the Bush tax cuts. This would virtually guarantee increases for those middle-class Americans who have paid little to no income taxes for the past 10 years. Overall, the WSJ reports that “higher withholding could take up to $10 billion a month out of workers’ pockets due to higher tax rates.” Furthermore, a childless couple earning $40,000 could find $100 less in their paycheck each month. That is very alarming considering many families are still living month-to-month as they struggle to make ends meet.
Taking no action is unacceptable, and the sooner a vote is taken, the better. Congressman Mike Pence, Chairman of the House Republican Conference is pushing leadership to reconvene in October and address the issue; urge your Representative to do the same.