In tracking payroll-related changes for more than 25 years, I have seen many initiatives come and go. I also made many predictions that were not so accurate.
For many years during the administrations of Presidents George W. Bush and Bill Clinton, I predicted a federal minimum wage rate increase was likely, and yet, it really only happened once in each administration. By 2008, I learned my lesson and we only reported on what the Obama campaign platform had proposed, initially an hourly minimum wage of $9.50 that would rise to $10.10, which he still was pushing by the end of his presidency. We made no predictions there on passage, but that’s no fun.
We can cover, with a little more confidence, the potential outcome of other initiatives. Iterations of the Mobile Workforce State Income Tax Simplification Act were introduced for the past five sessions of Congress. Even though the measure, which would standardize the state taxation of nonresident workers, would pass the full House—it did so twice--we knew it would not go anywhere in the Senate. I’m waiting for a surprise from the 115th Congress.
In the 2017 Bloomberg BNA Payroll Outlook, we looked at the White House proposals that would affect payroll. We also observed the early behavior of the Republican-controlled Congress. What we found needs to be taken with a grain of salt.
Congress’ pace in addressing President Donald Trump’s priorities, at least those related to payroll, has not been quick and may not meet the goals set for the administration’s first 100 days.
For example, while initially at odds with Republican tax-cut proposals on the campaign trail, Trump did settle to a plan that would cut the number of tax brackets down to three from seven, reduce the top rate and increase the lowest rate (but dramatically raise the income threshold subject to tax).
Because this was seen as Trump agreeing with the Republican plan, as the 115th Congress started its session in January, Congress could have acted to move legislation and had it ready for him to sign soon after Inauguration Day.
After all, Congress passed the Lilly Ledbetter Fair Pay Act relating to equal pay in early 2009 and President Barack Obama signed it his ninth day in office.
While that 2009 law was not nearly as complicated as tax-cut legislation, we could surmise in December 2016 that Congress would have progressed further in providing Trump with legislation that would have an immediate or early term impact soon after he entered the White House. That seemed possible, especially with Republicans in control of Capitol Hill and a conservative president with an aggressive agenda and agreement on several issues.
And we said so in our Payroll Outlook for 2017, published Jan. 25.
Instead, Congress seems to still be mulling over how to eliminate the morass of a law that is the Affordable Care Act and it appears now that any quick tax cut maybe off the table pending some progress on the overall tax-reform project, with many approaches being debated.
We may still get a midyear change in tax rates and thus, for payroll, new withholding tables by July. But the tax change may be much broader and affecting what is taxable.
Our Outlook covers the gamut of potential changes for payroll professionals in 2017. We make assumptions regarding federal and state taxes and wage and hour issues. We know what could happen, but as always, have no special foresight to what exactly will happen.
As of today, the various proposals in Congress are just that: proposals. Many still are at the introductory stage and maybe a debates in the various committees on the merits of each will commence soon.
Until then, uncertainty, the bitter enemy of payroll professionals everywhere, remains.
When it comes to payroll-related changes, especially at the federal level, we cannot predict what will happen with any real confidence. We can only do our best to report as the proposals develop beyond the initiative stage and keep you as informed as you can be about how your work could be affected by it all.
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