Curmudgeon's Corner

Bush Tax Cut - Yea or Nay?

Posted by Al Campbell on Oct. 7, 2010

Economy, Political, Quality of Life, Taxes, U.S.

Most of us have probably heard the back-and-forth between Democrats and Republicans concerning the “Bush Tax Cuts” that are set to expire at the end of 2010 if not extended by Congress and agreed to by the President.

The Wall Street Journal, in an editorial this morning, provides a view of the impact that failing to extend these cuts will have.  A family earning just $40,000 filing jointly without children will see an additional $95 per month in taxes; same family with one child will see an additional $135 per month in taxes; with two children, an additional $165 per month in taxes, and with four children, an additional $215 per month in taxes would be incurred.  (The assumptions, according to the WSJ, are that the family takes the standard deduction, that the child credit falls from $1,000 per child to $500 per child and that no minimum alternative tax applies.)

We will have a ‘lame duck’ session of Congress after the fall elections.  It remains to be seen if Congress will deal with this expiring tax cut issue or if it will simply do what it loves to do, and “kick the can down the road” for the next Congress to handle.  Of course, there may be some real residual animosity from one side or the other as the results of the fall election are determined and that could easily throw a new dynamic into the mix.  This, by the way, is a Congress that failed to set a budget by the October 1^st deadline, so almost anything could occur.

There will be backlash, if these cuts aren’t continued, as people come to understand that this tax reduction by Bush impacts virtually all taxpayers and not just the “rich” as has been claimed.

This delay is also causing payroll departments and payroll firms some angst since they will have to make changes to their software programs depending upon Congress’ action or inaction.  That is apparently from a two-week to a two-month process depending upon to whom one listens.

This has been one of those out of sight, out of mind kinds of things.  We hear the ranting back and forth but have no real way of tying it to our own pocketbooks until after the fact.