Obama aims to extend tax cuts for the middle class
12 July 2012
Posted by: SAIT Technical
By Business Day (Reuters)
US PRESIDENT Barack Obama yesterday tried to shift pre-election focus from slowing job figures to what he called a more equitable tax regime for the middle class.
Mr Obama sought a one-year extension of former president George Bush-era tax cuts for families earning less than $250000 a year, seeking to spare the economy the outcome of taxes going up on January 1.
Republicans in Congress are unlikely to be swayed, as they have consistently argued that the tax cuts should be extended for everyone, including higher earners.
Mr Obama has pushed for what he calls "tax fairness” in his campaign for re-election on November 6, repeatedly urging Congress to make the tax cuts permanent for families making less than $250000 a year.
His Republican challenger, Mitt Romney, has suggested that Congress wait to act until January, when he hopes to take office.
The tax cuts will expire on January 1 without congressional action, part of a so-called fiscal cliff that could hit the US economy alongside deep automatic spending cuts.
Analysts warn that the effect of rising taxes and lower federal spending could tip the economy back into recession.
Robert Gibbs, a senior adviser to Mr Obama's campaign, defended the proposed tax extension yesterday as a way to help boost middle-income Americans and propel the US economy.
"We have to continue to grow our economy — we need to grow it from the middle class out,” he told NBC's Today show.
"Millionaires and billionaires — they don't need a tax cut. They're not struggling in this economy. They've done well even as the middle class has shrunk,” Mr Gibbs said.
The president's proposal comes as legislators return from a weeklong recess.
The expiring tax cuts set up what could be another deeply partisan fight in Congress, where Republicans hold the House of Representatives and Mr Obama's Democrats narrowly hold the Senate.
It is not clear whether any legislation would pass before the November election, or after it.
Representative Tom Price, a member of the house Republican leadership, told the Fox News Sunday television programme at the weekend that the house would pass legislation this month to preserve the Bush-era tax cuts for another year, a move he said that Mr Romney supports.
Representative Xavier Becerra, a member of the house Democratic leadership, said Democrats would not support any measure that did not address the nation's fiscal challenges in the long term.
"Those are bills to nowhere,” Mr Becerra said on Fox News Sunday, referring to the house Republicans' legislation efforts to extend the tax cuts.