Paychecks Heading For The Fiscal Cliff
Payroll managers sweat tax rates as the politicians argue.
It seems there’s no end to the negative consequences of the fiscal cliff. And just the latest to be highlighted is the chaos it’s about to cause for payroll managers. WNPR’s Harriet Jones reports.
If there’s one thing taxes cause, it’s paperwork. In a little more than a week from now, payroll managers everywhere will have to start computing paychecks for employees for the new year. Trouble is, no-one knows how much tax we’ll be paying.
“If a deal is not reached by then, they’re going to have to sort of guess what the withholding tables will look like for next year, and whether they want to use the current withholding tables as a kind of back up.”
Michael O’Toole is from the American Payroll Association. His organization has issued a call for a deal to be reached in the fiscal cliff negotiations by December 14th, just before those payroll managers get to work. He says if there’s no certainty, many companies will be forced to assume the Bush era tax cuts will be rolled back.
“Employees would see an immediate increase in their taxes being withheld from their pay.”
Yes, next month, even if there’s a last minute fiscal cliff fix, you could still see a bigger bite from your take home pay. Just because there wasn’t time to process the paperwork. The problem is most acute for small businesses, according to Andrew Markowski of the National Federation of Independent Business in Connecticut.
“It’s very typical in a small business for the owner to wear multiple hats including being the CFO, CEO and COO. Oftentimes they’re doing payroll themselves or they’re handling it in-house. They don’t have a payroll staff or the ability to outsource it to a larger firm like many of the big corporations have.”
Markowski says this kind of uncertainty is already having real world economic effects.
“It means hiring, any new hiring is going to be stymied, and business owners are just hanging on to see what happens.”
So never mind January 1st, as far as your paycheck is concerned, we may be heading over the cliff next Friday. Michael O’Toole says that doesn’t appear to be changing any minds in Washington just yet.
"I do think that the representatives and senators as well as their staff are aware that this is an issue for businesses, but it’s one of many issues they face in deciding what to do about the fiscal cliff."
For WNPR, I'm Harriet Jones.