Working through Tax Carnival #4
'Fabulous' frugal fest

Warning! Congress is back in town!

Summer vacation --- I'm sorry, "district work session" -- is over for our Representatives and Senators.

Us_capitol_1 They've headed back to Washington, D.C., where they have about a month to deal with issues such as how to pay for various federal programs (including IRS operations), find a way to increase the minimum wage that some GOP leaders were so hot to hike back in August and rescue the wealthy from the estate tax, an effort that failed before lawmakers went on vacation back home to meet with their constituents.

Congress also has to follow through on revival of some tax breaks for the middle class: deductions for money we pay toward state sales taxes, college tuition and fees and a tiny bit of what teachers spend each year to supplement their classroom supplies.

Good luck with all that.

Realistically, expect lawmakers to focus on what absolutely has to be done to make sure they get to return to Capitol Hill in January. That do-in-a-month deadline I mentioned isn't anything official. That's how much time is left until the next target recess date in early October, which will give politicians about a month to return home once again to drum up votes for November's midterm election.

Voting_2 And what all Representatives and those Senators who are up for reelection this time will concentrate on are hot-button campaign issues, ones they think will encourage voters to keep them in office. Once assured they get to stay in D.C., then they can turn their attention to finishing up necessary legislation in the waning days of this Congressional session.

So we might actually, finally, see the resurrection of those popular, but long-postponed individual tax deductions. These tax breaks -- for state sales taxes, tuition and fees and educators' out-of-pocket expenses -- are technically dead, having expired on Dec. 31, 2005. But those of us who find them useful in cutting our annual IRS bill have taken Congress at its word -- what were we thinking?!?! -- that the write-offs will be restored and we'll be able to claim them once again on our 2006 taxes.

That trust is not totally misplaced -- yet. Congress regularly makes the effective dates of laws retroactive. But it just has to get its act together and do it! We need enough election-vulnerable members to believe the restoration of these tax breaks can swing enough votes their way on Nov. 7.

Along those same election-influenced lines, Hill watchers say a couple of other tax matters might also see action in the next few weeks. Don't be surprised if there's a move to make permanent the $1,000 child tax credit and marriage penalty relief provisions, which were part of the 2001 tax bill and are set to expire in 2010.

It will be an interesting September. Keep your eyes on Washington, not only to see what, if any, tax (and other) measures will make it through the legislative process, but also to get a preview of what you'll hear in stump speeches when your lawmakers come back home in October to beg one more time for your vote.

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