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Reducing Withholding Burdens—But How do you “Pay” for it?

The Hill‘s “Floor Action” blog has a good write-up of the debate around H.R. 674, the bill that will be on the Senate floor this week.

It withdraws a tax withholding rule—never implemented—that everyone agrees is too costly and burdensome on government contractors. It would force them to do huge amounts of paperwork, just to squeeze a small amount of tax compliance out of them. But lightening that burden will allow some non-compliance and reduce badly needed revenues.

This is no time to be throwing the government’s books even further out of balance, so the House and Senate have to go looking for ways to “pay for” the repeal of this rule. They must lower spending or raise money elsewhere to make up for the lost income to the government. Says “Floor Action”:

[House] members voted to adjust a calculation for Medicaid eligibility that even the White House approved. But Senate Democrats have indicated they don’t like that “pay for,” and instead may be looking at raising taxes on corporate jet owners. Senate Majority Leader Harry Reid (D-Nev.) may also have an interest in maintaining a piece of the tax rule for companies with a history of evading taxes.

By lowering spending and revenues, leaving more money with the private sector, the House’s version “saves” about $150 per U.S. family. It doesn’t lower spending as far as it lowers taxes, though, so it increases the national debt by about $40. A cost estimate for the Senate version is not yet available.

The House and Senate must pass the same bill before it is ready for the president, of course. It could be that differences between the spend-less House and the tax-more Senate may yet block this bill from becoming law.

How should this be resolved? You can weigh in here, or in the comments on the bill’s page. The current vote on H.R. 674 is below. Click to vote, comment, learn more, or edit the wiki article on the bill.

Tags: , | Categories: Taxation |

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WashingtonWatch.com Digest – November 7, 2011 – The WashingtonWatch.com Blog

[...] Reducing Withholding Burdens—But How do you “Pay” for it? [...]

Mary Steele Yorktown VA

Several ways to recoup that money-

1-Start with making sure to stop the $4.2 billion dollars in EITC to illegal workers!

2-Make sure unemployment goes to legal workers only!

3-Make sure jobs are done by legal workers to prevent billions in unnecessary unemployment costs!

4-Make sure unemployed legal immigrants and citizens are back to work so states don’t have to put out money for them instead of contracting that helps businesses grow and grow that state’s economy so they need less help and max revenue!

Taking it to the People – The WashingtonWatch.com Blog

[...] is up to you. Which way do you think the payroll tax cut should be paid for? (Congress has had disagreements like this [...]

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