The Lame-Duck Congress: So Many Tax Issues, So Little Time
– Everyone knows about the expiring Bush-era tax cuts
—how taxes will jump for every taxpayer if the cuts sunset as mandated in the 2001 law. But that’s only the tip of the tax iceberg. Other issues, in no particular order here, also demand attention: 1. Patching the alternative minimum tax
(AMT): Absent Congressional action, more than 28 million taxpayers will pay an average of more than $3,700 additional tax on their 2010 returns because of the AMT. Congress has repeatedly “patched” the AMT to protect those households but hasn’t done anything yet for 2010. 2. Estate taxes
: People dying in 2010 will pay no estate tax, no matter how large their estates. Already five billionaires have taken advantage of that tax hiatus and—who knows?—others may have plans to join them this month. But miss the December window and everything changes—estates worth more than $1 million will face tax rates as high as 55 percent. 3. Stimulus Tax Provisions
: Tax provisions in the 2009 stimulus act, most notably the Making Work Pay credit, also expire at year’s end. Expiration of MWP alone will cut workers’ after-tax income by an aggregate $60 billion next year. Other provisions that make the child credit more refundable, expand EITC for larger families, help pay for college, and exempt $2,400 of unemployment compensation from income tax will also disappear, pulling nearly $20 billion more out of taxpayers’ pockets. 4. Tax Extenders
: Congress has yet to address the annual list of expiring tax provisions, all of which get extended every year. All this is a lot to deal with in the next ten days.