Bible Money Matters

Christian personal finance

Menu
    • About
    • Archives
    • Contact
    • Close
  • Making Money
      • Popular Articles

        • 50 Ways To Make Money: Maximizing, Creating And Increasing Your Income
        • 10 Weird And Unconventional Ways To Make Money
        • Making Money With A Blog (e-Book)
        • 10 Places To Sell Or Trade Your Unused (Or Broken) Electronics
        • Ways To Make Extra Money Series: 20 More Income Generating Ideas From Our Readers
        • Making Side Income Can Help Blunt The Impact Of Becoming A One Income Family
        • Earn Cash Back With Discover it® Credit Card
      • Recent Articles – Making Money

        • Best Sites Like Fiverr To Make Money As A Freelancer
        • 13 Of The Best Independent Contractor Jobs
        • 25 Of The Best Gig Economy Jobs
        • How To Make Money Blogging: Turn A Blog Into A Business
      • Categories

        • Making Money
        • Investing
        • Retirement
        • Jobs & Work LIfe
        • Money
        • Income
    • Close
  • Saving Money
      • Popular Articles

        • 50 Easy Ways To Save Money Every Month
        • 10 Weird And Unconventional Ways To Save Money
        • 10 Practical Ways To Save Money And Increase Your Net Worth
        • How To Save Money On Just About All Of Your Regular Monthly Bills
        • Ways To Watch TV Without Paying An Arm And A Leg For Cable TV
        • Save Money On Your Hospital Bill - Just By Asking
      • Recent Articles – Saving Money

        • Living Stingy: 13 Tips For Spending Less
        • How To Save $100k In 7 Practical Steps
        • Stairs App Review: Save And Invest To Earn 4-6% Interest
        • Honey Review: Save Money Automatically When You Shop Online
      • Categories

        • Saving Money
        • Frugality
        • Planning
        • Finance
        • Saving For Retirement
        • Savings Accounts
    • Close
  • Banking
      • Best Rates For 2019

        • Best Credit Cards
        • Best Savings Accounts
        • Best Mortgage Rates
        • Best CD Rates
        • Best Brokerages
        • Free Credit Scores
      • Recent Reviews

        • M1 Finance Review: Free Trading App And Automated Investing
        • Tablo 4th Gen Over-The-Air DVR Review: The Best Device For Cord Cutters
        • TradeStation Review: Commission Free Stock And ETF Trades
        • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
      • Categories

        • Bank & Software Reviews
        • Investing
        • Credit
        • Banking
        • Mortgage
        • Insurance
        • Family Budget
    • Close
  • Recommended
  • Video
    • Close

Taxpayers Could Face A Tax Increase As Congress Delays Vote On Taxes

By Peter Anderson 9 Comments - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited October 8, 2010.

Share
Pin
Tweet
Share
0 Shares

We’ve written about the Bush tax cuts several times in the last few months, and how if Congress doesn’t act, the tax cuts will be expiring for everyone, not just the wealthy.   While I still think it’s a remote possibility that the tax cuts won’t be renewed, and that congress will just blame it not being renewed on the other party, there is a more likely scenario.  That the tax cuts could be renewed for everyone except high income earners, but that it won’t be renewed until the very last moment.

Bush Tax Cuts: To Be Renewed, But Not Until The Last Minute?

While I’ll be glad if the tax cuts do get renewed, they’re now saying in Washington that any more delays in renewing the tax cuts could result in some serious problems.

Lack of congressional action on 2011 income taxes may force the Treasury Department to make unprecedented moves to prevent U.S. workers from seeing large tax increases in their January paychecks.   The issue: 2011 tax-withholding tables. Treasury officials usually release the tables, which determine the take-home pay of millions of wage-earners, by mid-November because it takes payroll processors weeks to adjust their systems before Jan. 1.

But congressional leaders recently postponed voting on taxes until after the election and lawmakers don’t reconvene until Nov. 15. The Senate is scheduled to take up several nontax issues when it returns and is expected to leave for Thanksgiving soon after, possibly pushing a vote on taxes into December.

“Things get very dicey after the first of December” because of employers’ need to know the 2011 rates, said Michael Graetz of Columbia University Law School, a former Treasury official.

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.

Some have suggested that if Congress doesn’t act in time, Treasury officials might consider a one- or two-month grace period in which it maintains current tables until Congress passes tax legislation. Capitol Hill tax staffers, meanwhile, say the Treasury could set 2011 withholding at current levels for joint filers earning less than $250,000 ($200,000 for single filers), on the assumption that Congress seems likely to enact this change.

Payroll Processors Need Time To Update Systems

Once again, Congress has dropped the ball. Their inaction means that payroll processors across the country are going to have a situation where they have to scramble to get their systems updated with new tax code – and since Congress has decided to kick the ball down the road until after the election (they don’t want to raise anybody’s taxes before the election), they’ll almost assuredly be putting the payroll processors in a pinch.

Payroll officials are “very concerned” about next year’s withholding, said Mr. Danilewicz, head of payroll at New York University’s Langone Medical Center, which has 15,000 employees. “It takes large employers three to four weeks to process and test these changes, and the government needs time before that to determine and publish them.”

He adds that large firms often run payrolls a week or two ahead of time, further pressuring the process.

A spokeswoman for Paychex Inc., which handles payroll for about 8 million employees of more than 500,000 small and midsize firms, said it takes two weeks to update systems properly.

A spokeswoman for Intuit Inc., which provides payroll programs to smaller firms, says it takes “fewer than 30 days” to incorporate withholding changes.

Treasury Not Sure What They Will Do

So basically at this point the payroll companies are left to guess what situation we’ll end up in, and the Treasury is now trying to figure out what they’ll do in anticipation of a possible change in tax law.

Treasury officials declined to discuss what they will do if lawmakers don’t come to a quick decision.

“The president and Secretary [Timothy] Geithner are confident Congress will vote to pass middle-class tax relief before the end of the year,” but Treasury “will maintain flexibility on the release of the withholding tables for 2011,” said a spokeswoman.

Any Treasury move to extend the status quo involves risks: If lawmakers don’t follow through, taxpayers could wind up owing big tax bills at the end of the year.

And such moves would be a radical departure from past practices, said Dennis Danilewicz, a recent president of the American Payroll Association who has done payroll work for three decades.

“I have never seen withholding tables based on assumptions about the law,” he said.

Treasury officials’ most obvious option is the least attractive. If they publish tables based on expiration of the Bush tax cuts, which occurs Jan. 1, millions of low- and middle-income taxpayers who have paid little or no income taxes for a decade would likely see increases in January. Prof. Graetz estimates that higher withholding could take up to $10 billion a month out workers’ pockets due to higher tax rates alone. Other benefits also are expiring.

A childless couple earning $40,000, for example, could see their monthly take home pay shrink by about $100, according to the nonpartisan Tax Policy Center. If they had three children, they might face a further cut of $125 a month, said Scott Mezistrano, an official with the American Payroll Association. (See table.)

If paychecks get smaller, even temporarily, taxpayer reaction is likely to be intense.

It really is frustrating watching the political game as congress decides they would rather not allow any tax increases before the election because it might hurt their re-election chances.  Hopefully people will take notice of their cynical game, and realize that increases for some are on the way, that payroll companies and possibly taxpayers will pay the price for their tom-foolery.

Even if Congress plans to extend current tax rates, it needs to do so quickly to avoid disruptions. 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.

“We need to get it right,” Mr. Danilewicz said. “Withholding is a sensitive subject, especially in a down economy when people live paycheck to paycheck.”

What do you think about the tax rates expiring, and Congress not taking action before the election.  Is it just more of the same from Congress?  Do you think they should be extended, or be allowed to expire?  No matter how you feel about extending the tax cuts, wouldn’t it just be better to vote on it now to give the Treasury and others time to prepare?  Tell  us your thoughts in the comments.

Related Posts

  • Will The Bush Tax Cuts Be Extended By Obama And Congress Into 2013 And Beyond?

    At the end of the 2012 tax year the Bush (or Obama) tax rates will increase to previous levels. Will the President and Congress act…

  • Bush Tax Cuts Still Not Renewed. Tax Cuts Become A Political Football In Election Season

    As we get nearer to election season the rhetoric surrounding one of the biggest tax issues this year is coming at us at a feverish…

  • Time To Get Taxes Done Or File A Tax Extension

    The hands of time keep turning.  No matter how badly you want to run from it, April 15th is close. Now, some of you have…

Share
Pin
Tweet
Share
0 Shares
Last Edited: 8th October 2010 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: Economy, Taxes

About Peter Anderson

Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his 2 children. He loves reading and writing about personal finance, and also enjoys a good board game every now and again. You can find out more about him on the about page. Don't forget to say hi on Pinterest, Twitter or Facebook!

Comments

    Share Your Thoughts: Cancel reply

  1. Brad Chaffee says

    This entire debate really makes me angry. I don’t understand how in the world anyone in their right mind could think that raising taxes for anyone in this economy, is the right thing to do.

    I am so sick and tired of hearing the brainless argument about how we need services such as highways, police, and fire fighters. That always seems to be the first place people want to go—to act as if anyone opposed to higher taxes is opposed to those services that are needed.

    Then there’s the “it’s only taxing high income earners” argument and that makes me just as mad. Those people who create jobs and provide services for others should not be punished because they have made more money. Oh wait, they won’t. They will just pass it down anyway so that argument is completely debunked. If Democrats believe in paying higher taxes, then how come they don’t check the box on their tax forms to do so. If they believe in it so much, why must they force others to act before they do so themselves? Wealthy people already pay more than I do according to their higher incomes, so I do not think it’s right to tax them more. The war against the wealthy has to stop!!

    Lastly, my most passionate argument on taxes, happens to be what all of these people crying for higher taxes seems to be ignoring. How in the world can you ignore the Government’s inability to spend the money responsibly that they ALREADY GET FROM TAXES? They can’t even spend that correctly, so why would we assume the problem is that they need more money? Anyone with brain matter could figure out that more money isn’t the solution—controlling spending is!! Spending is the PROBLEM!

    We as a country already have stolen from us, when it’s all added up, more than half of our hard work! More than 50% of the money we make pays taxes. How many roads and police and firefighters are we funding here? The entire world’s worth?

    End of RANT. Haha! Sorry Peter, this has, as you can probably tell, been on my mind lately. :)

    Reply
    • Peter Anderson says

      haha.. did i open a can of worms here? No, i understand the frustration. It almost never enters into the debate that spending might possibly be part of the problem. Ya think?

      Reply
      • Brad Chaffee says

        Haha! That can of worms opened up when Obama started threatening the wealthy with higher taxes. :)

        It is very frustrating and to make matters worse, I found myself on the most mushy-brained resource ever called the huffington post. That’s really what fired me up.

        Instead of argue with those blind clueless commenters, I decided to rant here. :) I hope it’s okay.

        Reply
  2. Andrew @ Money Crashers says

    Peter, I couldn’t agree more how tiring it is to see the political games going on. We never really know what the true motivations are…are they trying to just delay the inevitable to get “in” with the voters? I think no matter what happens, there is going to be a negative. Extending tax cuts makes it that much more difficult to get out of our fiscal debt….getting rid of them helps with debt but screws people over personally and financially in what is already such a tough economy. There really isn’t an easy solution which makes it even more frustrating.

    Reply
  3. David/moneycrashers says

    If I were a betting man, I’d put my money on Congress letting them expire, setting us up for huge tax cuts, and then a big round of apologies from those idiots claiming some form of ignorance.

    Just my two cents

    Reply
  4. Alcoholic Millionaire says

    They should be allowed to expire. The biggest issue this country faces is not building highways or funding police, it is our unfunded liabilities (Social Security/ Medicare). The Retirement age should also be gradually rolled back, people are living longer and should work longer, or if they want to retire early they can do it on there own dime.

    Reply
  5. Ron says

    Hey ??Alcoholic Millionaire I think you lost some brain cells from your substance abuse. Listen the real issues of 47 to 50% of the working individuals pay no state or federal income tax. The second issue is to many able bodies on welfare and the highest percent are minority groups based on weighted average per population of each discipline of ethnic groups. The third issue is too many who feel they are above doing menial tasks or jobs so they find liberal loop holes to qualify them for welfare or some form of government aid. Now we come to issue No. 4, We have so many illegal individuals and many of them work for cash paying no taxes and robbing american workers from having a job. The employers also are avoiding taxes and other employee expenses. The ones who are working with fake identification are being paid below average pay which qualifies them for low income tax dollars support. The fifth issue is a President and wife who take this country as stupid, vacations all the time, leisure living and not spending time working but rather letting his czars keep him informed kind of like KGB agents. I am saying Obama is spending money we don’t have, what about Green Obama’s Woman, a flight to Martha’s Vineyard a day ahead of Hubby, what happened to fossil fuel think green??? Oh that don’t apply to you all. The last thing I have to say is we can see why Obama wants Obamacare, if it were in place we would be paying for all the piss poor managing of our tax dollars being wasted by our ass hole leaders, all of them. The fed can’t run the postal service so what the hell makes you think Obama can run Obamacare. The regime will make the middle class pay for all these lazy non tax paying dead ass dead weight bunch of welfare lazy deadbeats. We Will See the cost of Obamacare be likened to the postal system, just keep raising the cost of stamps and all mail related disciplines, the cost of healthcare/obamacare will continue to go up in cost as more people are added to the welfare or government programs. ? Just a few issues to think about ? Alcoholic Millionaire, PS cut the outrageous wages and retirement pay and benefits of these government workers$ ? PS cut the outrageous wages and retirement pay and benefits of these government workers$ from The Anti Hollywood Style Royalty, we are the People of The Republic ?

    Reply
Previous Post: What Is A Health Savings Account (HSA)? How Does It Work?
Next Post: Don’t Let Tithing Rules Rob You of the Joy of Giving
Discover Investment Platforms

Popular Posts

  • 21 Easy Ways To Earn Free Amazon Gift Cards
  • 10 Best Free Tax Filing Services And Software Online
  • 21 Apps That Pay You Real Money Fast
  • 17 TV Apps And Live TV Streaming Services To Watch TV Free
  • 30 Legit Online Jobs That Pay Well
  • 37 Easy Ways To Get Free Gift Cards
  • How To Get Free Stock
  • 40 Easy Ways To Get Free Money Fast
  • 21 Places To Read Free Books Online
  • 24 Legit Online Jobs
  • 17 Best Work From Home Jobs: A List Of Legit Online Jobs That Pay Well

Recent Posts

  • A Eulogy And A Remembrance Of My Dad, Mark Lloyd Anderson
  • Why Do We Celebrate Our Independence On The Fourth Of July?
  • Enjoy Your Memorial Day But Let’s Remember Those Who Gave The Ultimate Sacrifice
  • 25 Bible Verses For A Happy New Year!
  • Merry Christmas To One And All: The Original Christmas Story
  • 401k Contribution Limits And Rules
  • Traditional And Roth IRA Contribution Limits Announced
  • M1 Finance Review: Free Trading App And Automated Investing
  • Tablo 4th Gen Over-The-Air DVR Review: The Best Device For Cord Cutters
  • Living Stingy: 13 Tips For Spending Less

Disclaimer

The information contained in BibleMoneyMatters.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.

In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

We respect your privacy: Privacy Policy.

Thanks for visiting!

Bible Money Matters - Seen On These Sites and more..
Bible Money Matters is a personal finance, entrepreneurship and investing community. Give more, save more and live more.

Copyright © 2025 · Bible Money Matters | Sitemap | Advertise | Privacy Policy