President Obama and House Speaker John Boehner continue to discuss various proposals to keep the U.S. economy from sliding off the metaphoric “fiscal cliff,” which is the actual combination of automatic federal tax increases and spending reductions that will occur on Jan. 1, 2013, if Congress takes no action in the next three weeks.
The specific components of the fiscal cliff include: 1) sequestration, 2) statutory discretionary spending caps, 3) expiration of the Bush tax cuts, 4) a debt ceiling increase. All these items will hit early in the New Year, and taken as a whole, may increase unemployment and have other serious ramifications for the economy.
The good news is that President Obama and House Speaker John Boehner (R-OH) continue to talk about the outlines of a proposal to address the fiscal cliff issues. The White House is seeking $1.4 trillion in tax revenue by, most notably, allowing the Bush tax cuts to expire for individuals making $200,000 or more per year and married couples earning at least $250,000 per year. House Republicans have countered with a proposal to extend the Bush tax rates for all income earners, and find $2 trillion in savings through tax reform and discretionary and mandatory spending cuts, including changes to Medicare and Social Security.
SHRM supports the Section 127 employer-provided education assistance credit. Currently, Section 127 is part of the Bush tax cuts that are slated to expire at year’s end. SHRM is the co-chair of the Coalition to Preserve Employer Provided Educational Assistance (www.cpepea.com), which is devoted to extending the Section 127 benefit permanently.
Federal unemployment insurance will expire at the end of December for millions of out-of-work Americans. Last year, Congress pared back federal unemployment benefits from a maximum of 99 weeks to 73 weeks. Regardless of what Congress does, states still provide up to 26 weeks of jobless benefits.
Employers and employees are watching the debate about the payroll tax cut extension, also. In 2012, the FICA payroll tax rate was cut to 4.2 percent for all workers on their first $110,000 of income. That rate will revert to its normal 6.2 percent on Jan. 1, 2013. For a listing of the employer-provided benefits scheduled to expire at the end of the year, click HERE.
Don’t forget, if you have tax, benefit or other HR-related questions, SHRM’s Knowledge Advisors are available to assist you. Go to www.shrm.org/hrinfo or call 800-283-SHRM (7476) and select option 5, weekdays 8:30 a.m. to 8:00 p.m. ET. To chat live with an HR expert, weekdays 10:00 a.m. to 4:30 p.m. ET, click HERE.