The renewal of the Bush Tax Cuts have been pushed into the last days of the 111th Congress. The consensus has been that all the tax cuts will be extended for a temporary period of time - 2 to 3 years. In fact, the Republicans in the Senate have guaranteed as much with their filibuster threats. However, the House today dealt a serious blow to any hope of this issue being settled before January of next year. Today in the face of Senate threats and promises of compromise, the House passed only a partial extension of the tax cuts. This will either end in the House bill stalling in the Senate or another bill being forced through negotiators that will reconcile the current bill with a Senate version. However, all tax bills must originate in the House so the Senate cannot start from scratch with a separate bill. This could make it almost impossible to complete the process this month.
As a result of today's vote, we are almost guaranteed to have the withholding tables increased effective January 1st of next year on every employee. So now is the time to inform your employees of the impending increase in withholdings and plan for the situation for your own families. This increase in withholdings will result in at least $100 less per month in every paycheck. On average, this will result in about $400 per family per month until an agreement is reached. With the Republican majority in the House in the next Congress, we can expect nothing short of a temporary extension of all the tax cuts. This will probably pass the Senate, and the President has hinted that he would accept this. But, for Americans - time is money. Hang in there taxpayers!
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