Roanoke Co. Financial Professionals Worry About Fiscal Cliff
Roanoke Co., VA - There have been a series of proposals and counter offers between the White House and Capitol over the past few day regarding the fiscal cliff.
Speaker Boehner is offering $800 billion in new revenue - all from closing loopholes, not raising taxes. The president's plan includes $1.4 trillion in new revenue.
In a new ABC News Washington Post poll, nearly twice as many Americans approve of the president's work on the fiscal cliff so far compared to the GOP approach. All of that uncertainty with how talks will turn out is starting to cause trouble as payroll processing for the New Year gets underway as early as Thursday.
That's leaving financial professionals across the area with extra work as they prepare and advise their clients about the "what ifs." Payroll certainly isn't the biggest issue we face as a country, but this is symbolic because as companies begin processing January paychecks, there's extra stress wondering exactly how much needs to be taken out in taxes.
Chris Hedges has been processing payrolls for over a decade and with more than 400 clients in 36 states, inaction on a budget deal on Capitol Hill has forced him to come up with a few backup plans.
"If you don't know what to prepare, for it could take weeks to implement on a large scale," said Hedges.
That's the same trouble for most if not all businesses.
The first scenario would see a deal being hammered out and nothing changing. The second would see Bush-era tax cuts and the payroll tax holiday disappear.
But those changes can be predicted; It's the third scenario that will cause the most trouble.
"The scenario where we don't know what's going to happen. So we have to be in a reactionary mode instead of proactive," said Hedges.
Ann Sharver is the director of Finance for the City of Roanoke. She's ready to implement the 2% hike in January. It's a last-minute Congressional deal that could cause some extra trouble.
"We could be in a scramble at that time to change the rates that we were otherwise planning to use when we go about processing payroll," said Sharver.
So what should you do as you wait for Washington?
"Make sure that they're prepared just in case nothing is resolved by the end of the year and it's sort of an unknown. Charge a higher 6.2% for the social security versus the current 4.2%," said Hedges.
If the Bush era tax cuts end, according to Lynchburg College's Economics Department, the average Lynchburg family of four would owe 3,500 more in taxes. The Bush tax cuts were supposed to expire in 2010 and the federal tax holiday was created as a one year tax holiday that's already been extended once.