Inaction on Bush tax cuts will hit many — instantly

A new report by the Tax Policy Center shows nearly three-quarters of Americans will pay more in taxes next year if Congress fails to extend the cuts enacted by President George W. Bush.

While Democratic leaders have vowed to maintain the Bush tax cuts for the middle class, their promise comforts few in the tax community since these very same leaders promised to fix the estate tax before it was temporarily repealed in January — and failed to do so.

The estate tax has been repealed for nearly eight months and lawmakers have yet to agree on how best to handle the situation.

If there is a repeat performance on the Bush tax cuts, the inaction will be felt instantly by taxpayers.

These tax cuts affect marginal rates, which are key in determining the amount of take-home pay in workers’ paychecks.

If Congress fails to extend them before the end of the year, come January employers must increase the amount of tax deducted from employees’ salaries — even if lawmakers promise to extend the breaks retroactively, as they have with the estate tax.

The Tax Policy Center states taxes will increase an average of 2.7 percent if the Bush tax cuts are not extended.