The aptly-named Frankenstorm received all of the Halloween Week hype, and with good reason. When a storm that powerful rolls into the Mid-Atlantic, nightmares ensue.
The real horror show, though, might not arrive until after Christmas. That’s when the Taxmaggedon monster comes lurching into town.
Taxmaggedon, of course, is the “fiscal cliff” we keep hearing about — that point when expiring tax breaks, automatic spending cuts, and other factors will converge and make our lives a living hell … unless Congress does something about it first.
“And Congress is exceptionally good at doing nothing,” jokes Bob Kerr.
Kerr, the senior director of government relations for the National Association of Enrolled Agents, took a spirited stab at explaining the fiscal cliff at CCH’s first-ever Small Firms User Conference in Atlanta. Sometimes, though, the absurd paints a better picture than reality.
“What does the legislative environment in Washington look like?” Kerr asked. “Think the ‘food fight’ scene from the movie ‘Animal House.’ “
Despite the political chaos in D.C., Kerr said it’s possible to make some educated guesses about what will happen between now and early 2013.
Here’s the first thing that will happen: CPAs, understandably, won’t have a clue about how to help their clients with their immediate tax planning needs.
How could they? The fiscal cliff’s main ingredients include the expiring Bush tax cuts, payroll tax cuts, a possible fix for the Alternative Minimum Tax, uncertainty over Obamacare, the debt ceiling drama, and sequestration (or massive, automatic spending cuts that kick in if Congress does nothing).
Adding to the chaos is this: The folks who will be dealing with all of this uncertainty are the politicians who make up the 2012 lame-duck session of Congress, “and lame ducks are notoriously unproductive,” Kerr said.
Believe it or not, though, Kerr says there is some — not much, but some — reason for optimism.
First, there’s this: Lame ducks or not, Kerr believes Congress will avoid doomsday for now by (a) “punting” on sequestration until next year, and (b) extending the Bush tax cuts and other tax extenders for another year.
You might call that “kicking the can down the road,” and you’d be right. But at least they won’t be pushing us over the cliff … yet. As always, time will tell.
Kerr’s second reason for optimism is this: A little CPA activism could go a long way here.
“Tax pros need to tell Congress that we can’t do our jobs (in this environment), and that all of our clients are constituents,” Kerr said.
There’s something about the word “constituents” that opens up a politician’s eyes and ears, isn’t there?
At the very least, Kerr said all of this fiscal-cliff talk might spur our elected officials to finally move toward meaningful tax reform.
On the other hand, when your default gameplan is to kick the can down the road, what are the odds?
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