As if anyone needed more proof that when lawmakers flirt with sweeping change the results tend to trickle down in unintended ways, FTN Financial chief economist Chris Low pointed out something in a webinar Thursday afternoon that has been largely overshadowed in the debate over tax cuts.
FTN Financial is a division of First Tennessee Bank.
Low noted with dismay that lawmakers left the question of whether they’ll extend soon-to-expire tax cuts unresolved when they departed the nation’s capital to come home and campaign for the midterms.
If the problem was politically treacherous before the midterms, wonder how pleasant the debate will be in a lame duck session when congressmen whose days are numbered would decide whether to kill or keep expiring tax cuts amid a brutal and lingering downturn?
Anyway, Low threw another monkey wrench into the mix. Congress theoretically has time to keep some or all of the tax cuts in place before the clock strikes midnight on Dec. 31.
Payroll processors typically need plenty of lead time in which to get next year’s tax tables in hand so they can work in the right withholding amounts for people who collect a paycheck. Not much has been said publicly about what will happen if Congress doesn’t get finished until the eleventh hour.
Should the Treasury or IRS allow a grace period that keeps everything the same for now? Even if tax cuts are extended for everyone, some people are privately wondering whether there will be enough time to stop paychecks from taking a temporary tax hit come January.