Tahlequah Daily Press

Local News

December 7, 2012

CPA: Fiscal cliff could be big problem

TAHLEQUAH — News pundits and politicians are clamoring to make their voices heard about the looming federal budget decision that, if not made by Dec. 31, could send America over the edge of the so-called “fiscal cliff.”

Local residents may be left scratching their heads, wondering what it all means, and how any budget decision – and the timing for when it’s made – will affect them.

Dr. John Yeutter, associate professor of accounting at Northeastern State University, explained that narrowly speaking, the “fiscal cliff’ is a set of automatic tax increases and spending cuts that will begin in 2013 if Congress does not reach an alternate agreement.

“For the average person, there are at least three issues that will affect them,” said Yeutter. “One is the Payroll Tax Holiday; another is the Alternative Minimum Tax; and the third is the expiration of a variety of current tax benefits, including tax rates.”

Yeutter said the payroll tax holiday is not technically part of the fiscal cliff, but it is set to expire at the end of 2012.

“For the past two years, workers have paid 2 percent less in Social Security taxes – 4.2 percent instead of 6.2 percent of wages,” said Yeutter. “This was done as an economic stimulus measure, to put more cash into the hands of middle-class workers. For someone making $60,000 per year, this is $1,200 – or $100 per month – more in taxes that they will pay, and thus $100 less per month to spend. Since workers stop paying into Social Security wages above $110,000, this is a tax increase that will specifically impact lower- and middle-class workers.”

According to Yeutter, who is also a certified public accountant and certified financial planner, the Alternative Minimum Tax was created to prevent those with high incomes from paying little or no taxes after taking deductions.

“The AMT includes an exemption amount of $33,750 for unmarried people, and $45,000 for married couples,” said Yeutter. “Taxable income above that amount is taxed at 26 percent. Every year until this year, Congress has passed an ‘AMT Patch’ that increases the exemption so the average taxpayer will not have to pay this tax. If the patch is not passed, a single parent with one child earning $52,000 will be subject to this tax for 2012.”

Congress often passes tax bills that expire after several years. Yeutter said some would particularly affect the average Oklahoman.

“The Indian Employment Credit and Depreciation provision – which expired at the end of 2011 - allows businesses and employers an incentive to locate on Indian reservations and ‘former Indian reservations in Oklahoma,’” said Yeutter. “The educator deduction allows school teachers who do itemize deductions to deduct up to $250 of their out-of-pocket cost of school supplies. This provision expired at the end of 2011.”

The “Bush Tax Cuts,” set to expire at the end of 2012, lowered tax rates at all levels, and added a reduction of the marriage penalty, according to Yeutter.

“The marriage penalty is a variety of provisions in the law that cause married taxpayers to pay more in tax than if they were not married,” said Yeutter. “The provisions in the ‘Bush Tax Cuts’ include having those married filing joint returns’ standard deduction twice that of the single deduction.”

As an accountant, Yeutter is concerned about the effect of the fiscal cliff on tax season.

“One result from this that will affect all taxpayers is that the uncertainty about current law has limited the ability of the IRS and tax software companies to prepare for coming tax season,” said Yeutter. “It is likely, if the expired deductions are extended, that many taxpayers will not be able to file their taxes electronically until March, so that the IRS processing system can be adjusted to reflect these changes. This was true for some situations this past spring; it will affect many more this year.”

As of Wednesday night, neither Congress nor Obama had conceded to compromise. Obama is resolute in raising taxes on the wealthy; the GOP in Congress insists on cutting federal programs.

But the stalemate may be ending. Thursday morning, Sen. Tom Coburn, R-Okla., told MSNBC that raising taxes on the wealthy may not be the worst short-term fix for the fiscal cliff dilemma.

“Personally, I know we have to raise revenue; I don’t really care which way we do it,” Coburn told MSNBC.

“Actually, I would rather see the rates go up than do it the other way, because it gives us greater chance to reform the tax code and broaden the base in the future.”

Coburn is known for taking a tough stance on “pork barrel spending,” meaning he would generally prefer to see entitlement programs cut to reduce the deficit. But he’s taking a more pragmatic approach in this instance.

“I think [the GOP] is arguing over semantics; $800 billion is $800 billion, and it’s still going to be a negative drag on the economy,” he said.

Yeutter, like many, others, is skeptical about either party conceding or compromising.

Yeutter referred to a poll taken by Dr. Robert Nassau, who teaches tax law at Syracuse Law School.

He polled 59 tax law professors at law schools about various parts of the fiscal cliff issue.

Over half of the respondents, 54.2 percent, believe Congress will act before the deadline; 42.4 percent believe Congress will surpass the deadline and will act shortly thereafter; and 3.4 percent indicated they think Congress will refuse to act at all.

“Why would this group of professors, who represent an informed and relatively unbiased group, appear so pessimistic about the ability of Congress to resolve these issues?” asked Yeutter. “The fiscal cliff was created in early 2012, to force Congress and the president to compromise. They haven’t been able to do it yet. Even though there are severe consequences to not acting, some appear willing to let these provisions expire, rather than act in the best interest of the country.”

Yeutter believes this to be evidence of an unprecedented political problem.

“I can remember Sen. Everett Dirksen and President Lyndon B. Johnson working to compromise on major issues like Medicare,” said Yeutter. “I remember Rep. Tip O’Neal and President Ronald Reagan likewise working together to reach a solution. I do not see that type of statesman-like action from the political leaders on either side.”

Text Only
Local News
  • ts-Trail-show-1.jpg Jackson takes prize

    Cherokee Heritage Center Museum Curator Mickel Yantz kicked off his 10th anniversary at the venue with the opening of the 43rd annual Trail of Tears Art Show this past Friday.
    “The Trail of Tears show was my first exhibit opening when I arrived 10 years ago,” said Yantz. “Since that time, the show has changed so dramatically; we’ve added so many new artists, and the art work has excelled over time. It’s like Christmas for me.”
    Yantz said he was exceptionally pleased with the opening reception.
    “We had a fantastic turnout,” said Yantz. “We had a lot of fun and sold some artwork, which is great for opening night.”
    The exhibit is on display at the Cherokee Heritage Center through May 26. This year’s show features 130 pieces of art spanning eight different categories, including basketry, graphics, jewelry, miniature, painting, pottery and sculpture.

    April 16, 2014 2 Photos

  • churchguy.jpg Some NSU students find Church of Monett offensive

    They turn heads every time they show up on campus, and some students at Northeastern State University are offended by their presence.
    The Church of Monett, Mo., has made periodic trips to Tahlequah to stage quiet demonstrations in public campus spaces in recent years. They carry signs that read, “Wives, Obey your Husbands,”; “To be Married to the divorced is Adultery”; and “Don’t be deceived: fornicators homosexuals idolaters adulterers thieves drunkards - shall not inherit God’s Kingdom.”

    April 16, 2014 1 Photo

  • Teen sent to hospital after being struck by tractor-trailer

    An 18-year-old Tahlequah man was struck by a tractor-trailer early Tuesday morning on the State Highway 51 bypass near Mimosa Lane.
    Tahlequah Police Capt. Tom Jones said officers responded to the scene at about 5:40 a.m., when Sage Sohns was found injured and lying in the road. A medical helicopter responded to the scene to transport Sohns to a Tulsa hospital, where he was being treated for a closed-head injury, police said.

    April 16, 2014

  • TPS board hears architect presentations for cafeteria

    Members of the Tahlequah Public Schools Board of Education heard from four architectural firms seeking a contract for construction at Cherokee Elementary School.
    TPS plans to build a cafeteria-auditorium and a music room with a stage, which may also serve as a safe room during storms.

    April 16, 2014

  • Briggs.jpg Local man hit with assault, burglary charges

    Prosecutors have formally charged a Tahlequah man accused of breaking into a motel room, tying a rope around a man’s neck and stabbing him repeatedly with a syringe.
    Jimmy Dale Briggs Jr., 33, is charged with first-degree burglary, assault and battery with a dangerous weapon, and two counts of threatening to perform an act of violence.

    April 16, 2014 1 Photo

  • Boy whose mom scolded deputies in trouble again

    Cherokee County sheriff’s deputies arrested a 15-year-old theft suspect Monday night after he allegedly assaulted his brother.
    Deputy Kim Novak said authorities were dispatched to a home and ultimately took the teen into custody. While there, they also discovered items that had been reported stolen, including a bed and several tools.
    Novak said the teen is the same boy who has previously been found to be in possession of stolen items.

    April 16, 2014

  • plane-crash-1-a.jpg Plane crash victims recovering

    Two Arkansas men remained in a Tulsa hospital Monday after the plane they were flying crashed into a wooded area in Cookson.
    According to the Federal Aviation Administration, the 1946 Ercoupe 415 crashed under “unknown circumstances” about a mile from the Tenkiller Air Park in Cookson Saturday morning.
    The Oklahoma Highway Patrol says 75-year-old John McCreary and 85-year-old Albert Demarco Jr., both of Ozark, Ark., were flown from Cookson to St. John Medical Center in Tulsa.

    April 15, 2014 1 Photo

  • walker-terrance.jpg Man taken for blood sample confuses hospital with hotel

    Tahlequah police say an Austin, Texas, man stopped Saturday mistook a local hospital for a hotel when he was taken to have his blood drawn.
    Officer Cory Keele’s affidavit says 20-year-old Terrance Walker was driving south on Muskogee Avenue at about 2 a.m. Saturday, swerving from one line to another.
    Keele tried to stop the car near Muskogee and Chickasaw, and Walker eventually slowed to a stop near South Street.
    Walker opened the car door as Keele approached. The officer said Walker had dilated pupils.

    April 15, 2014 1 Photo

  • ennis-scottie.jpg Knife-cutting incident lands man in jail

    A Tahlequah man jailed for allegedly cutting a woman with a kitchen knife was released on a recognizance bond Monday.
    Scottie Lee Ennis, 42, was arrested after Officer Austin Yates was sent to Tahlequah City Hospital late Friday night.
    There, Yates spoke with Jennifer Pennell, who had apparently suffered a stab wound to her arm.
    Pennell told Yates she and her husband, Ennis, had gone to Dewain’s Place earlier in the evening, and while at the bar, a man bought her a drink.

    April 15, 2014 1 Photo

  • hawley-jeremy.jpg Tahlequah man bonds out after arrest for assault

    A 22-year-old Tahlequah man bonded out of jail Monday after his weekend arrest on domestic assault charges.
    Jeremy Hawley was booked into jail Sunday for domestic assault and battery in the presence of a minor and interfering with a 911 call.

    April 15, 2014 1 Photo


What to you think of a state Legislature proposal to forbid cities from raising the minimum wage? Choose the closest to your opinion.

The federal government should set the minimum wage across the board.
States should be allowed to raise their minimum wages, but not cities.
Both states and cities should be allowed to raise their minimum wages.
Cities should be allowed to raise their mimum wages, but not states.
There should be no minimum wage at all.
     View Results
Tahlequah Daily Press Twitter
Follow us on twitter
AP Video