for having been so inattentive to this blog.
Here's an article about tax issues congress needs to resolve quickly. And it doesn't even address inheritance tax, which I will refer to in another post tomorrow.
Congress Faces Long List of Work to Complete in Short Work Period
By Brett Ferguson and Heather M. Rothman
Publication Date: 11/16/2010
Lawmakers returned to Washington Nov. 15 with a full agenda of unfinished business, but a desire for a short lame-duck session could result in short-term fixes needing to be addressed again in the 112th Congress, congressional aides said.
Congress's schedule allows for only about five weeks to complete what would normally take months to accomplish. At the top of the list is the extension of nearly $4 trillion in tax cuts originally passed in 2001 and 2003, an annual “doc fix” to keep Medicare reimbursement rates to physicians from falling, and passage of all of the annual appropriations bills.
The lame-duck schedule calls for a week of work beginning Nov. 15, followed by a one-week break for Thanksgiving, with Congress resuming the week of Nov. 29. Officially, Congress had been planning to adjourn for the year on Dec. 3, but aides now expect Congress to remain in session for an unspecified period of time as lawmakers try to forge deals on the tax issues, appropriations, and other pressing matters.
In addition to extensions of the Bush-era tax cuts, Congress is under pressure to deal with the $35 billion tax extenders package of tax breaks that expired at the end of 2009, a “patch” to keep the alternative minimum tax from affecting an additional 21 million households in the coming months, and a sharp increase in the estate tax.
Power Shift Poses Challenges
Aides said the already difficult task of completing the work also is made tougher because of the Democrats' midterm election losses that will leave Republicans in control of the House in January and Democrats with a diminished Senate majority.
The shift in power in Congress will give Republicans few reasons to accept tough compromises in the coming weeks if they feel they can strike a better deal on extending the tax cuts to higher-income taxpayers when the next Congress begins, aides said, noting there is a good possibility that the tax cuts will be allowed to expire at the end of the year as negotiations stretch on into the 112th Congress.
The most controversial issue remains whether Congress should permanently extend all of the 2001 and 2003 tax cuts, or just those that apply to households earning less than $250,000 per year. Republicans argue that they ran for Congress this year on the promise to make all of the tax cuts permanent and have no intention of allowing the current top tax rate of 35 percent to return to its pre-2001 level of 39.6 percent. They say that the increase would hurt small businesses that pay taxes through the individual income tax system.
President Obama and House Speaker Nancy Pelosi (D-Calif.), however, have been clear that they believe extending the top tax rates would be fiscally irresponsible at a cost of roughly $70 billion per year.
“Our position in the House has been that we support the tax cut for the middle—for everyone, but not an additional tax cut at the high end. It's too costly. Those tax cuts have been in effect for a very long time; they did not create jobs,” Pelosi said Nov. 12.
Paychecks Set to Fall
The stalemate means that, if Congress does not act before Jan. 1, businesses will begin withholding more money from all of their workers' paychecks to reflect the expiration of the 10 percent tax bracket and 25 percent tax brackets, in addition to higher rates for upper-income households.
The tax cut expiration also would slash the value of the child tax credit to $500 from $1,000, reinstate the so-called marriage penalty, and raise the top tax rates on capital gains and dividends. The top capital gains rate would return to 20 percent, while dividends would be taxed at ordinary income tax rates.
Game Plan Unclear
While senators would not reveal much, what is clear is that even committee members are split over how to proceed. While Schumer left room for temporary extensions of some of the tax cuts for top-earning households, committee member Debbie Stabenow (D-Mich.) said she cannot support an extension of the Bush-era tax cuts for anyone making more than $250,000.
“Everyone gets a tax cut,” Stabenow said. “I don't support [one] for the top two rates because that has not created jobs or stimulated the economy in this country and certainly not in my state in the last 10 years.”
Asked how Democrats can get the votes in the Senate without a compromise, Stabenow said, “I guess Republicans have to decide whether or not they hold middle-class people and small businesses hostage for a few very, very wealthy people in the country who have done very well at the expense of everybody else.”
The entire Senate Democratic Caucus will meet Nov. 16 and the bicameral, bipartisan congressional leadership will meet Nov. 18 at the White House with President Obama.
The complete text of this article can be found in the BNA Daily Tax Report, November 16, 2010. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »
© 2010, The Bureau of National Affairs, Inc.
Outlook Quick Parts will speed up your e-mail
1 month ago