“Tax policy after 2012 is a large part of what the election of 2012 is going to be about,” predicts Clint Stretch, managing principal of tax policy at Deloitte Tax.
The biggest reason we can be sure this fight is coming is that a good portion of the tax code—including President Bush’s signature 2001 and 2003 tax cuts—is set to expire by the start of 2013.
Here (in chronological order) is a preview of some coming tax hikes and fights.
Come Jan. 1, 2012 American workers will see less in their paychecks as a temporary two-percentage-point cut in the Social Security tax expires. That’s a $2,136 tax hike for someone earning $106,800, the maximum subject to the tax. Obama had pushed for this as a short-term stimulus and would like to see it extended, but this is one tax cut Republicans are ready to let die.
The AMT Patch, Etc.
Five dozen other tax breaks expire at the end of 2011, including a “patch” that keeps more than 20 million middle-class families from having to pay the alternative minimum tax. Congress could well delay acting on these so-called “extenders” until after the 2012 election—so it won’t have to figure out how to pay for them. After all, the 2010 patch wasn’t signed into law until Dec. 17, 2010, causing taxpayers much uncertainty about how much in estimated taxes to pay.