The House yesterday rejected the Senate’s proposed 2 month extension of the 2% reduction in the employee’s share of their social security taxes. According to press reports, the House passed a bill which, while not perfect, would at least prevent the looming tax hike for all working Americans, extend additional unemployment benefits and prevent cuts to Medicare providers with another “Doc Fix” for a full year. Besides these three key policies, the House also included some policies helpful to job creation in trying to get the Obama administration to approve the Keystone oil pipeline (from Canada) project as well as an important change to fix Medicare’s finances, thus strengthening it for seniors today and tomorrow. This change is crucial toward tackling the nation’s largest and most pressing fiscal issue — our entitlement crisis.
The Senate however decided to pass only a two-month extension of these three policies and then left for vacation.
The Senate bill also chose to limit the amount of income that qualifies for payroll tax relief “so that upper-income earners don’t get more than their ‘fair share’ of the tax relief during this brief two-month period.” The Senate bill paid for it all by increasing fees on mortgages financed by Fannie Mae and Freddie Mac.
From a payroll processing objective, the Advisor wishes that the idiots in DC would realize how difficult their inaction makes payroll processing. It leaves so much undone and so many people hanging. Working Americans will have no idea whether or not they’ll suffer a tax hike when the extension expires. Payroll processors will take on additional costs and have to jump through more hurdles in having to change their payroll systems to keep up with Washington’s policy “du jour” — and frankly, it will be an even more difficult for small businesses who do payroll by hand. Time & Pay is ready no matter how the idiots in DC (who have probably never had a do payroll in their lives) behave.
The Advi$or will keep you posted, but it looks like we will all see a reduction in our net pay come Jan 1, 2012.