“It will take an act of Congress…”
How many times has this phrase been invoked as an exaggeration for effect in one or another seemingly difficult task.
But this time it’s real. It will take an act of the U.S. Congress to prevent payroll taxes from automatically increasing by two percent effective January 1, 2013. And it’s not just for some; it’s for all of the approximately 160 million wage earners who depend on a payroll check to survive.
It stems from legislation designed for the year 2011, which reduced Social Security taxes for employees from 6.2 percent to 4.2 percent. The employer’s share of the equation remained at 6.2 percent.
The legislation was subsequently extended for the calendar year 2012, but its future now depends on whether President Obama and the Congress can come to terms with each other and agree on a more extensive package of other taxes,
The inability of President Obama and Congress to reach an agreement on this “taxing” issue would also affect the Federal Income Tax brackets. The Bush Tax Cuts would immediately go into effect on the first day of 2013, along with the Social Security increase.
At that time tax brackets would automatically shift from the current 35% to 39.7%; the current rate of 33% to 36%; the current rate of 28% to331%; and the current rate of 25% 28%.
As an offset for the extension of the Social Security as it stands now, the $110,100 wage base for Social Security taxes could increase to$114,900
Another major issue is an uncompromising deal between the President and Congress which would do away with the $5,250 tax exclusion in employer provided Education benefit.
This deal would eliminate a deduction used to reimburse employees for furthering their education. Thus employers would no longer offer reimbursements.
A conversation with Dan McFaul, the press secretary and spokesperson for Congressman (R-Chumuckla) Jeff Miller in Washington, yielded little information on the subject of tax cuts. He did indicate, however, that Congressman Miller had received substantial input from his constituents here.