Coming to Congress after the November elections is a double-header of sorts. However, this is not one where you typically enjoy hotdogs, popcorn and rooting for your favorite baseball team. This double-header involves a plan concocted by Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) whereby they get to call Congress back in session twice after the voters have fired many of the members. However, fired or not, these men and women will be able to vote on issues that could affect all of America for years to come. One such vote extends all or someof the Bush tax cuts that were put into law in 2001 and 2003. The question that many in America wanted to know before the election, and desperately need to know as soon as possible, is how many of these tax cuts and deductions will be continued.
This writer is all but sure that most of these tax deductions will be extended during the lame-duck session of Congress. My prediction is based on the fact that the pay check of every American employed in this country is involved. What will happen if a large number of the Bush tax cuts arent extended is that more money will need to be taken out ofpay checks to cover the additional taxes that will be owed. This withholding adjustment could be quite drastic for some Americans.
According to the Tax Policy Center at the Brookings Institute, a person making $40,000 per year will see their withholding increase by almost $100 a month. That means their paycheck in Jan. 2011 will be $100 less than it was in December this year. This payroll change assumes the person is single with no children. If a child is included, then the check could be light to the tune of almost $300. The Joint Committee on Taxation, which is a bipartisan committee in Congress designed to calculate tax provisions, has identified 72 tax provisions or deductions that expire on the last day of this year. They include deductions like the one that allows for school teachers who buy school supplies to deduct their costs. There is the one that reduces individual taxes on the first $12,000 that is earned or the child care/day care tax deduction. On that list that is set to expire is the state sales tax deduction allowed for folks who live in states that dont have a state income tax or the college tuition deduction. Also, lets not forget that the child tax deduction currently in law will be cut in half from $1,000 per child to $500.
These payroll changes will be real and quite damaging come January unless Congress does the tough work and actually votes on some or all of these expiring provisions sooner rather than later. Withholding is so personal to people, said Michael OToole, the director of government relations for the American Payroll Association. People are apprehensive about whether Congress will act on time for them to produce accurate payrolls at the beginning of the year. The fact that they didnt do this work before the elections is shameful. However, if they fail to do this work quickly when they return in November for their double-header lame duck session, that would be inexcusable and deplorable.
Stay tuned to see if my prediction holds true for the double-header lame duck session of Congress.
Elizabeth B. Letchworth is a retired, four-times-elected United States Senate Secretary for the Majority and Minority. Currently she is a senior legislative adviser for Covington & Burling, LLC and is the founder of www.GradeGov.com.
