Rep. Chris Van Hollen (D-Md.), the Assistant to Speaker Nancy Pelosi (D-Calif.), on Wednesday said there will be no pre-election vote on extending tax cuts enacted by President George W. Bush.
"Given the fact that the Senate Republicans insist on holding middle-class tax relief hostage to try and get budget-busting breaks for the top two-percent, we'll take the fight to the election," he told The Hill.
A one-year extension of the top two brackets will cost approximately $40 billion, as compared to the roughly $200 billion it will cost to extend the lower brackets through 2011.
All of the Bush tax cuts are slated to expire this year. Absent congressional action, every paycheck in American will incur a tax increase in January.
This means that Congress must make a decision on the Bush tax cuts shortly after returning to Capitol Hill in November or risk creating chaos within the payroll industry on how paychecks are taxed next year.
Under normal circumstances, payroll withholding tax tables are released from the Treasury's Internal Revenue Service in mid-November. And payroll industry officials recently told The Hill that if the tax rates are not set by Dec. 10, it could be too late for payroll administrators to withhold the correct amount of tax from workers' paychecks in January.
If Congress fails to act on the issue this year, paychecks will incur a tax increase of at least $400 as the 10 percent tax bracket will disappear and all taxpayers will be pushed into the 15 percent bracket, according to the American Payroll Association.
Rates would also rise on additional wages.
If the Bush tax cuts expire, the 25 percent, 28 percent, 33 percent, and 35 percent current tax rates will revert in January to 28 percent, 31 percent, 36 percent, and 39.6 percent, according to the Tax Policy Center.
House Majority Leader Steny Hoyer (D-Md.) has repeatedly said that middle-income taxpayers, meaning individuals earning less than $200,000 and couples making less than $250,000, will not see a tax increase next year.