Credit unions are watching what impact the tax compromise agreed to by President Obama and Republican leaders will have on their payroll operations.
The deal, announced Monday, would keep the across-the-board tax cuts that are set to expire for all taxpayers on Dec. 31. In addition, it would cut payroll taxes by $120 billion. Specifically, it would reduce the payroll tax for one year, and apply to the portion paid by workers, not employers.
"The sooner that credit unions have certainty on this, the better," said NAFCU Director of Legislative Affairs Brad Thaler. "The end of the year is always busy and this is adding to the uncertainty."
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Once Congress passes the legislation, which has been criticized by Democratic leaders because it keeps the tax cuts for taxpayers earning more than $250,000, the IRS will have to send a memorandum to all employers explaining the implementation. Therefore, it is possible that credit unions and others won't know all the details until after the New Year begins.
President Obama has strongly defended the agreement, and in a news conference yesterday pushed back hard against the Democrats who criticized the agreement.
"I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts," Obama said. "I think it's tempting not to negotiate with hostage-takers, unless the hostage gets harmed. Then people will question the wisdom of that strategy. In this case, the hostage was the American people, and I was not willing to see them get harmed."
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