Whether youre happy, sad or indifferent with the election results on Tuesday, elections do have consequences and will affect all of us. Especially tax preparers.
However, theres still a major amount of uncertainty in the filing season ahead, and the election results dont necessarily clear up all there is to know.
For starters, there will be a lame duck session, with much still up in the air. Simple extenders such as the alternative minimum tax patch, the R&D credit, the deductibility of state and local taxes, and the alternative minimum tax patch have not yet been enacted. The expiring Bush tax cuts, a portion of which President Obama has pledged to extend (but only for the middle class), is on the table and presumably will somehow be passed before the end of the year. And of course, the whole fabric of the estate tax has yet to be decided.
And theres no guarantee that the lame duck session will go smoothly. Although an effort to repeal health care reform and all the tax impacted provisions that are in it would almost certainly be subject to veto, Rep. John Boehner, R-Ohio, expected to be the next Speaker of the House, has promised its repeal.
I believe that the health care bill that was enacted by the current Congress will kill jobs in America, ruin the best health care system in the world, and bankrupt our country, he said.
And probable House Majority Leader Eric Cantor, R-Va., is ready with a variety of spending cuts, but has acknowledged that President Obama wont work with Republicans to enact real entitlement reform unless it includes major tax increases, which would go against the very basis on which Republicans ran.
Senate Majority Leader Harry Reid, D-Va., unchastened by the election results, indicated that he is willing to listen to the Republicans proposals, but they can forget about making the expiring Bush tax cuts permanent.
I expect that after a brief public relations show of bipartisanship well move into a period of gridlock, predicts Doug Van Der Aa, CPA, JD, of Federal Tax Workshops. Its difficult for either party to achieve much in Washington under these circumstances, he added. The President and Democrats in the Senate dont have anywhere near the votes they need in the House, and Republicans dont have a veto-proof majority, even if they could move legislation through the Senate, so it will be difficult to get things done, including tax changes.
The best hope now would be that the lame duck session passes an extenders bill, said Van Der Aa. All the provisions that expired in 2009, such as the above-the-line deduction for college tuition and the business credits, need to be extended. And if they dont pass an AMT patch before they go home, more than 20 million households will be hit. The AMT will include just about all middle-class households. A married couple with kids, each earning $30,000 per year, is not rich, but they will be paying AMT if nothing is done.
So, despite the possibility of gridlock, thats one item that will be high on the agenda of the upcoming lame duck session.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access