The
Hill
White
House could protect middle
class from tax hikes if deficit talks falter
By Peter Schroeder and Bernie
Becker
12/09/12
The
White House has the power to
temporarily protect taxpayers from middle-class tax hikes even as upper
income
rates rise if Congress does nothing and all of the Bush-era tax rates
expire in
January.
Experts
and lawmakers alike agree
that Treasury Secretary Timothy Geithner has the power to adjust how
much is
withheld from paychecks for tax purposes — for all taxpayers or just
for some.
By
doing so, Geithner could ensure
paychecks reflect the White House position that wealthier taxpayers
with annual
income higher than $250,000 see their taxes rise. Geithner at the same
time
could leave withholding tables where they are for the middle class,
ensuring
those workers don’t see a higher cut from their paychecks.
“If
we were to, say, go over the
cliff and the rates go up, he could modify those withholding tables
such that
the average employee out there would not effectively see any more or
less taken
out of his paycheck,” said Bill Hoagland, senior vice president at the
Bipartisan Policy Center.
The
tactic could buy Washington
precious time to strike a tax agreement without pinching the economy,
but it carries
substantial risk. If the administration miscalculates where rates end
up,
tinkering with withholding could morph tax refunds into hefty bills.
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the rest of the article at The Hill
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