#Taxes: What is Next? Nothing for now!

Congress has passed the employee payroll tax relief. Now the question is what is next? What will the Congress do? The Washington Post in a front page news piece over the weekend stated the obvious and alerted the public in case they have not been paying attention that higher taxes are coming if Congress does nothing--- surprise ,surprise.

Let's see what is on the horizon:

• The payroll tax extention just passed will expire at the end of the year meaning taxes will increase for all working American. This is a two percent increase on wages up to the Social Security Wage Base. If  both spouses are collectively  making $100,00  year, then the increase is $2000.
• The Bush tax cuts will expire at the end of the  year. Unless Congress acts not only does the top rate increase but so do the bottom tax rates. The marriage penalty will also be re-instated.
• The current rates on capital gains now at fifteen percent will expire at the end of the year.  
• The lower rates on dividends installed in 2003 will expire at the end year.
• The Alternative Minimum Tax (ATM) will scoop up millions of taxpayers unless a correction is enacted before the end of this year.
• There are about 140 other either already expired or expiring provisions ready to raise billions by eliminating existing tax treatment. 

Seems like there should be plenty to do. The interesting and almost unbelievable occurrence is that it is likely nothing--not-a thing--will be done on any of these matters until after the election in a lamer than lame duck session of Congress that is surely to be called to address these and other matters. A Congress that may have a new President-elect. a whole new Senate Leadership in the wings, and perhaps, many new House Members will be asked to make real decisions. What makes any of us think this same group with possible entirely different post election dynamics can come up with any great solutions? And if they can, why wait? Why rush it at the end? These hurried end of the year sessions even in the best of times are usually ugly and will most assuredly be so this time. 

The financial impact of these tax issues is in the trillions of dollars. The effect on the economy no matter what happens will be enormous. The political consequences will have a lasting impact. There are many who think President Obama will win the day and get his way of higher taxes on the wealthy. It has been his mission to do so. But what about the middle class he professes to revere? Will not they be impacted by the payroll tax increase, higher tax rates on capital gains, and so many other changes?

Of course, the dreaded deficit is lurking in the background. How much more in deficit is the President willing to pile on? (the answer is as much as he can) How much more is Congress willing to approve? The Government will soon exceed its debt limit.--hard to believe since it was just increased less than 6 months ago but at a deficit rate of $ 4 billion a day, it adds up quickly. 

There are many variables that will be at play then and in the interim when all this comes to a froathy head. Outside of our National Security, these tax increases, their fiscal and economic impact should be paramount to Congress and to each and every one of us. Decisions need to be well-considered and right. The thought of a bunch of lame ducks quacking in the middle of the night with time a ticking, making these kind of decisions is dreadful, just dreadful.