"The Descendants," a hit with the Golden Globes crowd and estate attorneys
Year-end tax moves for small businesses

Payroll tax cut extension in doubt again

Remember that game of political chicken I mentioned a couple of days ago?

That was when funding for Uncle Sam's operations was tied to extending the payroll tax cut. Well, Congress went ahead and worked that deal out and federal offices are still open.

But it looks like Congress just can't stand for things to go smoothly.

The Senate on Saturday handily approved a two-month extension of the current 4.2 percent reduced payroll tax rate. 

Obama has indicated he's willing to sign the bill, even though it contains Keystone XL pipeline provisions he didn't want.

Now, however, it looks like the deal is going to face opposition in the House.

And if Capitol Hill can't get agree on the payroll tax cut for 2012, around 160 million workers could see their taxes go up by the 2 percentage points in question. Those potentially higher-tax-paying folks represent this week's By the Numbers figure.

160 million workers with higher payroll taxes

Not so fast: House Speaker John Boehner (R-Ohio) and his Republican colleagues want to renew the game of political chicken.

Boehner, appearing on NBC's "Meet the Press," said that the short-term deal negotiated by Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) should be re-worked by a conference committee.

The goal, said Boehner, is to come up with a deal that lasts at least a year.

"Well, it's pretty clear that I and our members oppose the Senate bill," Boehner said. "It's only for two months. You know, the president said we shouldn't go on vacation until we get our work done. And frankly, House Republicans agree."

Reasons for reversal: The reason for GOP House opposition, according to Boehner, is that the two-month deal creates uncertainty for employers as they budget for 2012.

Really? This from a guy who's part of a House that has thrown innumerable measures into uncertainty while it milks every issue for political points.

Now you're concerned about the difficulty we, individuals and businesses alike, encounter when Congress routinely screws around as deadlines near or even, as in the case of the estate tax, come and go.

And then we have McConnell, who helped broker the short-term deal. Suddenly, he's not so sure of himself.

A McConnell spokesman said today that the Senator now believes the best way to resolve House Republican concerns with the Senate bill is to, as Boehner suggests, hold further negotiations with the House.

Attention Merriam-Webster editors. In your next edition, insert an image of McConnell alongside the definition of milquetoast.

Payroll tax cut pros and cons: There are some valid reasons to oppose the payroll tax cut, which I personally don't like. I'm getting close to retiring and I want Social Security to be, well, secure while I'm collecting it.

As for the 2 percentage point cut being an effective economic stimulus, get real.

Different types of tax cuts create jobs in different ways. The hope here is that with even a just a bit more money, people will spend it, creating demand for companies to ramp up production, necessitating more employees to meet that demand.

But we've had the payroll tax rate at 4.2 percent instead of 6.2 percent for almost a year now and unemployment is still high. If demand is up, a lot of businesses apparently are meeting it by making existing employees work more.

Essentially, with so many people in so much debt, this payroll tax money is in most cases being used the same way that the rebates offered by the prior administration were -- to pay off what folks owe or to pay for day-to-day necessities.

And for those folks, the payroll tax cut is a no-brainer. Since they need every extra dollar to make ends meet, they say it's a great idea.

But those who don't need the money now and who are focusing on Social Security benefits down the road, will say the payroll tax cut is a gimmick and bad tax policy.

The answers, like all prompted by political and tax questions, depend on your point of view.

Political problems? And that brings us to the real reason Capitol Hill lawmakers are fighting over the payroll tax cut. Politics.

Let's be honest. While the Obama Administration would like for the payroll tax cut to help spur the economy, it also was created to serve as a re-election talking point.

As soon as the Senate deal was approved Saturday, some Republicans reportedly expressed concern that that a two-month extension would give Democrats the upper hand in the second round of the tax-cut battle early next year.

But will this GOP tactic work? Republicans have been catching more anti-Congress heat than their Democratic colleagues.

Are GOP lawmakers really willing to be cast as the ones taking money out of workers hands as the 2012 election year begins?

And today The Hill newspaper reports:

"A source on a private House GOP conference call said Boehner spoke approvingly of the Senate deal as a win for the GOP but that three other members of the leadership team - Majority Leader Eric Cantor (Va.), Whip Kevin McCarthy (Calif.) and Conference Chairman Jeb Hensarling (Texas) - all criticized it. The source said that with the exception of Reps. Tom Cole (Okla.) and Walter Jones (N.C.), Boehner was the only person on the call to praise the deal."

Attention Merriam-Webster editors. Make room in your next edition to also insert an image of Boehner alongside the definition of milquetoast.

Tax fight now or later: So what's next? The House is expected to return next week to consider the Senate deal.

If most members decide they'd rather go home for the holidays, they'll sign off on the two-month extension and we'll wait for the payroll tax cut fight to resume in 2012.

But if the House does as Boehner wishes, 160 million workers could lose their payroll tax cut because the Senate has left for the year and Senate Leader Reid says he won't call his colleagues back into session.

To paraphrase Tiny Tim from the classic "A Christmas Carol," God help us every one.

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Dolgan Ashenstone

The bill that was signed into law was originated in the Senate. The Constitution states in Article 1 Section 7 that revenue bills must originate in the House. Was this bill an end run by the Senate around the Constitution. If so, what is the remedy for unconstitutional legislation?

Receipt forms

The only bad impact about reducing taxation is that it has not been attained nor will ever be acquired by our authorities as it prevails these days. There may be a factor that taxation become so low that it damages us, but I never think that we are near that factor, and it is still untried.


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