If your first 2011 paycheck is smaller, thank, er, blame Congress
Friday, November 19, 2010
Congress' lame duck session began this week, but it quickly became obvious that it will operate as all other sessions. Things won't get done until the very last minute, if at all.
Democratic leaders will hold some votes on the expiring Bush tax cuts, possibly as early as today. But those will largely be symbolic, since there's no agreement on what to do about the coming tax changes.
A meeting between Obama and Republicans to try to hash out some common ground has been postponed until Nov. 30.
And both House and Senate leaders have already announced that the real work on the tax cuts and other pending tax measures won't begin until after Dec. 6. That's when Congress comes back after its Thanksgiving recess.
Really? Everyone's known about the need to take care of things for, in some cases, years. But members of Congress must have their vacation. Just like they did when Memorial Day rolled around and the Senate couldn't bring itself to stay in D.C. and deal with extenders.
Taxpayers will pay for the delay: While it's annoying to watch Congress continue to procrastinate, the ramifications are real.
Every day it delays action, Congress essentially insures that you and I will see smaller paychecks come January.
Why? Because the payroll withholding tables for 2011 that employers (or payroll companies that workplaces outsource the job to) are now based on what the law will be in January.
No, the IRS can't just take Congress' word that it will do its job and make some final decisions on what the rates will be. Would you trust them to follow through, especially based on recent (and not so recent) history?
And the 2011 law means that there's no 10 percent income tax rate for anyone and highter tax rates for wealthier individuals.
The IRS does the work on these calculations in October or early November. The lead time is necessary to get the data to workplaces in time for them to implement them on Jan. 1.
But with the tax votes now pushed into December, expect to see your first 2011 paycheck withholding at the higher rates.
And that will mean a smaller paycheck (or two) when the coming year rolls in, even if Congress eventually extends all the tax cuts before Dec. 31.
- Tax agenda for lame duck, and future, sessions
of Congress is packed
- The economic and political perils of Congressiona gridlock
- OMG! What will happen to my tax bill if the
Bush tax cuts expire!?!
- Three more likely votes on Capitol Hill for keeping
all of Bush's tax cuts
- Expiring tax cuts might just do that
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Why is it that the average wage earning Americans always ended up getting the short end of the stick. We are already struggling month in and out, now we are going to see less in our paycheck. What is this world coming to?
Posted by: bankruptcy | Saturday, November 20, 2010 at 04:36 AM