Wednesday, September 15, 2010

WSJ portrait of big faces in tax policy in 2010

1. President Barack Obama
2. Larry Summers, Director, National Economic Council
3. Sen. Harry Reid (D., Nev.), Senate Majority Leader
4. Sen. Mitch McConnell (R., Ken.), Senate Minority Leader
5. Rep. Nancy Pelosi (D., Calif.), Speaker of the House
6. Rep. John Boehner (R., Ohio), House Minority Leader
7. Rep. Steny Hoyer (D., Md.), House Majority Leader
8. Sen. Max Baucus (D., Mont.), Chairman, Senate Finance Committee
9. Sen. Charles Grassley (R., Iowa), ranking minority member, Senate Finance Committee
10. Rep. Sander Levin (D., Mich.), acting chair, House Ways and Means Committee
11. Rep. Dave Camp (R. Mich.), ranking minority member, House Ways and Means Committee
12. Sen. Ron Wyden (D., Ore.), outspoken tax reformer
13. Rep. Paul Ryan (R., Wisc.) tax and budget reformer
14. Sarah Palin, potential 2012 presidential candidate
15. Timothy Geithner, Secretary of the Treasury

As the Wall Street Journal's Laura Sanders explains, these folks have a lot on their plates right now:

Not since the Great Depression has Congress had so much tax work to do in so little time.

From the income tax to the estate tax, from the alternative minimum tax to levies on capital gains and dividends—plus much more—nearly every area of individual taxes is in limbo. Come January, for example, the top federal rate on dividends could be as low as 15% or, if nothing is done, as high as 40%.

It gets worse: Lawmakers have only four weeks to tackle these massive issues before Columbus Day, when they adjourn until November. During these weeks, each party will be looking for opportunities to make political theater ahead of the coming elections. The drama will likely slow things further, especially in the Senate, where lately it has been tough to muster a filibuster-proof 60 votes for any measure more controversial than a flag raising.

This past week, President Obama gave a barnstorming speech in favor of dropping the 2001 tax cuts for those making more than $250,000, and House Minority Leader John Boehner (R, Ohio) countered with a proposal to extend them for all taxpayers for two years.

Despite the theatrics, says veteran analyst Clint Stretch of Deloitte Tax LLP, "The unprecedented uncertainty on taxes is unlikely to be resolved until December." What's more, he warns, lame-duck sessions are unpredictable as well.

Come next January, your tax code may or may not change a lot, depending on whether Congress decides to extend some or all of the Bush tax cuts, let them expire, or do something entirely different.

But given the political winds evident in yesterday's primaries, it is very likely that some of the faces and the red/blue patterns in the picture above will look quite different next January.

One thing is for sure: there is a lot of uncertainty--about the tax code as well as the economy, and uncertainty makes it hard for decisionmakers to plan.

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