GREEN BAY — If a fiscal cliff deal is not reached and it is looking less and less likely, what is next for Congress?
While some tax increases would be immediate, many in Washington say you won't feel the full effect New Year’s Day.
There are ways to fix tax codes after the fact. But some in Congress would rather see change happen right now.
Wisconsin 6th District Congressman Tom Petri says Monday has been a frustrating day of waiting and watching in Washington.
“It's disappointing. We revert to the tax levels that existed during the Clinton administration and the Bush tax cuts for low income and higher income people expire,” the congressman said.
Petri says higher tax rates will bring in more money and shrink the federal deficit. But he says it's not the way people back home would want.
Both financial and political analysts say the fiscal cliff is not absolute.
“It's not as though the clock is going to strike 12:01 on the first of the year and the federal government will shut down or the payments will stop. There are ways in which the federal government can avoid some of the worst issues that will come from this,” said St. Norbert College political science professor Charley Jacobs.
“Nothing drastic is going to happen. It's not like Y2K, where at the stroke of midnight everything will stop. For those who are employed, the first paycheck of the year may seem more money taken out in taxes, particularly social security tax,” said Jim Olson, a certified public accountant with Schenk in Allouez.
Analysts say congress can put in tax breaks later on if a deal is reached, and have them start retroactively.
“I think that Republicans may swallow a somewhat bitter pill here at the end of the year, allow tax rates to go up on some high earners, take some credit for some compromise, and then use the leverage that they'll have after the first of the year to try to come up with a grander bargain than they would have accomplished before the first of the year,” said Jacobs.
When FOX 11 asked Congressman Petri if he would take a day off on New Year’s Day for the holiday, he said "we're going to be here straight on through until it's dealt with."
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