This week’s CBTV show is entitled, “The Tax Man Cometh! But Don’t Pay a Penny More Than You Have to This Year.”
As we all know, our U.S. tax code changes every year, and this up-coming year will be no exception, as you will see from my opening headline to the show:
The end of the year is quickly approaching, and with it comes the expiration of a few key tax breaks that were put into effect by the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.” Congress must now vote on whether or not they want to extend these benefits for 2012. But, with the Congressional “super committee” failing to come to an agreement on a deficit reduction plan before the November 23rd deadline, no one knows what to expect from Congress in 2012. With the failure of the bipartisan Joint Select Committee on Deficit Reduction to cut out anything from our national budget, will Congress be able to come to an agreement on these “temporary” tax breaks? Only time will tell…
Nearly one year ago, payroll tax cuts were put in place by Congress in an effort to stimulate the economy. Payroll taxes fund Social Security, and were cut 2%, from 6.2% to 4.2% for employees, as part of the 2010 Tax Relief Act. According to the Center on Budget and Policy Priorities, the payroll tax cut gives about $934 per year to the average worker, but is set to expire at the end of this year. President Obama proposed extending and expanding this cut in 2012 as part of the American jobs act in September, which called for the tax rate to drop even further to 3.1%, for both employees and employers.
Extending the payroll tax cut in its current form through 2012, is expected to cost the government $120 billion dollars, and combined with the extension of emergency unemployment insurance, that number rises to $200 billion. Increasing our country’s “spending” is obviously not what Congress should be focused on right now, especially when the goal of the “super committee” was to agree upon $1.2 trillion dollars in spending cuts and possible tax increases. At the same time however, the backlash that could occur from raising payroll taxes or eliminating long-term unemployment benefits, could be substantial.
The “super committee” was formed as a result of the Budget Control Act of 2011, which raised the debt ceiling $400 billion dollars on August 2nd. Unfortunately, the federal deficit passed the $15 trillion dollar mark last month, and the new debt ceiling of $15.2 trillion is expected to be hit sometime in January. Debt continues to pile up, due to ongoing spending, and it looks like next year will be more of the same. In 2012, most Americans will likely have the same benefits they had in 2011, which means that retirees will not see cuts to programs like Social Security or Medicaid. If there is a silver lining in the failure of the “super committee,” it’s that people will probably not have to worry about tax increases or benefit cuts until this time next year, when we’ll most likely, go through it all over again!
Again, I would like to hear your comments on this week’s show. Are you happy with your current federal tax rate you’re paying? Do you think the reduced payroll tax is helping you financially? And what taxes do you think should increase to pay down the national debt?
Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
No comments:
Post a Comment