I hear this question everyday. What will Congress do? Will tax rates rise? Of course, I don’t know the answer, but my past experience tells me that Congress will do something before it comes time to file your tax return.
See, the situation that we are hearing about in the news isn’t new. Congress has gotten in the bad habit of passing laws that are effective for one year only. That means that the taxpayers don’t know the laws that apply to the year until the year is about over. Of course, this doesn’t make sense in any logical sense. How can you plan when you dont know the rules that you are playing by?
Why does Congress pass laws that are effective for only one year…and then often pass them at the end of the year in which they are effective? Many insiders think they do this so that they can get lobbying attention each and every year. Why pass a law that lasts forever and lose power over that issue when you can have domain over that issue each and every year.
I am not going to prognosticate on what Congress will do. But I will venture to guess that this isn’t the last year that Congress will wait until the last minute to make up their mind on the tax law until the end of the year. I have seen this consistently happen for at least the last 8 years…I bet that it will continue to happen.