Enjoy tax day 2012, next year could be 'Taxageddon'(Read article summary)
Sure, this tax day won't be fun, but a raft of tax cuts are set to expire this year, and with Congress preoccupied by Election 2012, Americans face the prospect of a much bigger tax bill in 2013.
J. Scott Applewhite/AP/File
Think tax day 2012 is bad? Just wait â tax day 2013 could be a real humdinger.
Not because of the taxes youâll be doing late into the night of Sunday, April 14, 2013. But because the tax situation for the next year may be a serious, unbridled mess.
Decoder certainly isnât minimizing this yearâs tax pain â what, the government can hire clowns and mind readers and here I am picking up the tab?
âThatâs whatâs making writing that check for taxpayers today so difficult and so painful,â said Rep. Jason Chaffetz (R) of Utah on a call with reporters. âWhen they see the waste, fraud and abuse that happens at the GSA and other parts of government itâs just so frustrating to the American people. And it should be.â
But frustrating wonât begin to describe taxpayer pain if almost half a trillion in tax hikes come into being on Jan. 1, 2013. Looming on the horizon are a raft of tax proposals that could blow up in taxpayers faces so immensely that Chamber of Commerce President Tom Donohue wrote sardonically in a Tuesday op-ed that âTax Day is upon us â and you should enjoy it. Why? As painful as it may be to write this yearâs check to Uncle Sam, it could be the smallest check youâll write for years to come.â
- $165 billion from the expiration of the Bush tax cuts.
- $124 billion from the expiration of the Social Security payroll tax cut.
- $118 billion from a failure to patch the Alternative Minimum Tax
- Roughly $60 billion from various tax cuts expiring â including stimulus cuts, estate tax cuts, and favorable treatment for businesses that make big purchases.
- $20 billion from tax increases from President Obamaâs health-care reform law.
Holy smokes, right? No wonder members of Congress nearly always list heading off what Heritage calls âTaxageddonâ as a principal concern. Add to that the fact that Congress has to deal with the budget-slashing sequester and the need to again raise the debt ceiling and December could be harrowing, indeed.Â
Mr. Collender points out that many expect Washingtonâs best â and perhaps only â opportunity to legislate on tax issues will be the lame duck session between November and yearâs end. Between tax day and November, the argument goes, members of Congress will be too distracted by the national political election to make much headway on such tough issues.
That leaves the lame duck. And thatâs hardly an auspicious moment for many practical reasons.
While there are seven weeks on the calendar between Election Day and New Yearâs Eve, Collender says, thatâs really more like four weeks when you account for Christmas, Thanksgiving, and a one-week exhale after the election.
Lame duck sessions are ânotoriously difficultâ for legislating, Collender points out, as ousted or retiring members and their staff are looking for their next jobs and, eventually, losing their offices to incoming members.
âSome [exiting] members just stop voting, they go home, the leadership canât force them to do anything,â Collender says. âWhat are you going to do, take away their committee assignments? Itâs difficult to count votes and difficult for leadership to maintain discipline.â
Given a cloudy electoral situation â itâs unlikely one party will sweep Congress and the White House â and the lame duckâs limitations, where will taxpayers be at yearâs end? Collender thinks theyâll be left largely in the lurch with short-term extension of current tax law â Bush tax cuts and payroll tax cut, live on! âbefore Congress returns in January to battle anew.
âInstead of the mother of all lame duck sessions it could be the mother of all disappointments,â Collender says. Americans will be saying, â âCurses! Foiled again!â and we go on for another six months.â
See you next April.