Tax cut would mean more money on pay day

Published 12:04 am Saturday, December 11, 2010

If Congress passes President Barack Obama’s proposed tax-cut and unemployment extension compromise, it could mean more money in most working Americans’ paychecks.

The proposal, which is expected to pass the Senate and to be considered in the House, would also extend Bush-era tax cuts, among other benefits, lawmakers say.

Local CPA Greg White said the measure would greatly affect most of our area’s population.

“The Bush tax cuts helped lower- and middle-income folks’ taxes more than any other tax code change during my 27 years of income tax preparation,” White said. “These cuts were implemented several years ago, and the discussion now is whether or not they are going to expire. If they are left in place – which I fully support –then everything will be relatively the same as the last few years.”

White said if the law reverts back to the pre-Bush rates, “Folks would be very hard hit locally.”

“For example, a single filer making $33,000 would pay approximately $835 more (in taxes); and a couple making $68,000 would pay approximately $3,350 more,” he said. “And, this doesn’t take into account if the filers have dependents under age 17, in which case reverting to the old law would cost another $500 per child.”

In addition to the saving locals on taxes, the measure also contains an added bonus – a one-year reduction in Social Security payroll taxes.

If passed, that would mean that nearly every worker in America should take home more money beginning in January.

Currently, the government takes 6.2 percent out of one’s paycheck, up to $106,800, for Social Security. That would drop to 4.2 percent in 2011, resulting in an immediate increase in take-home pay.

The bill also would reinstate the estate tax, which phased out this year.