No Payroll Tax Settlement Reached

View PDF | Print View
by: taxhelpers
Total views: 16
Word Count: 487
Date: Sun, 25 Dec 2011 Time: 12:24 PM

The holiday season may not be very joyous for the millions of people depending on unemployment insurance and those hoping for the continuation of lower payroll taxes in 2012. Once again gridlock struck and Congress could not come to a payroll tax settlement. The House of Representatives voted 229-193 to reject the payroll tax settlement the Senate passed by an overwhelming majority of 89-10. They agreed to a two month extension during which a longer deal could be reached. Without the payroll tax settlement the tax rate on workers paychecks will jump from 4.2 to 6.2 percent, taking an average of $1000 out of American pockets next year.

The pattern of moving from one crisis to another with no agreement until some impending deadline and angry public reaction would make each side believe the other would be force to capitulate has become a familiar one. They only just avoided a government shutdown over budget disagreements. Now there seems there be no payroll tax settlement before the New Year because the Senate is already in recess for the holidays and would have to called back by President Obama in order to vote on a new payroll tax settlement, if the House can even come up with one.

The difference of opinion between Democrats and Republicans on tax policy lies behind the political posturing that accompanies every attempt to come up with a tax settlement. The Republicans insist that any tax settlement must be paid for with cuts in entitlements and other spending. The Democrats want the extension in unemployment insurance and a payroll tax settlement to be paid for by increasing taxes on the wealthy. It’s the same argument that prevented agreement in the fall in the “super committee” on deficit reduction and the debt ceiling crisis of the summer.

The question now, if no agreement is reached, is whom the public will blame for no payroll tax settlement. "I saw today that one of the House Republicans referred to what they're doing as 'high-stakes poker,' " said Obama, who appeared at the daily White House briefing. "He's right about the stakes, but this is not poker. This is not a game — this shouldn't be politics as usual." House speaker Boehner declared, "Now it's up to the president to show real leadership," Yet many believe that the Speaker is being held hostage by the Tea Party members of the House because if no payroll tax settlement is reached the Republicans will be the cause of a tax increase, something they have continually said they would never allow to happen.

"The issue right now is this: The clock is ticking; time is running out," said President Obama after the vote. "And if the House Republicans refuse to vote for the Senate bill, or even allow it to come up for a vote, taxes will go up in 11 days."

About the Author

Prince Ahmed writes for Community Tax Helpers which offers IRS or State Tax problems with a wide range of services e.g. Tax Settlement Companies and Tax Settlement

Comments