Obama Wants to Uphold Tax Cuts for the Middle Class
President Barack Obama urged the Republicans to approve a one-year extension of tax cuts for families earning less than $250,000 a year. He emphasizes the distinction between the Democrats and Republicans and tries to create a mandate for a tax plan after the election.
Neither congressional leaders nor administration officials expect a tax bill to pass before the presidential election. Mitt Romney and his fellow Republicans want to extend cuts for all of taxpayers. President Obama said that the country can’t afford the cost. The cost for the upper-income tax would be around $800 billion for the next 10 years.
White House aides said that if President Obama was re-elected, he would veto the move to extend all of the upper income tax cuts. The tax cuts were passed during the George W. Bush administration and will expire on December 31, together with the payroll tax cut approved under the current administration.
If the tax cuts are not extended, the middle-income family that makes around $70,000 a year would have to pay $3,000 more. Higher-income families have to pay much more. The tax increases as well as the spending cuts scheduled to take effect at the same time will help decrease the federal deficit in half. But most economists say that the impact could result into another recession.
Congress wouldn’t allow that to happen as they don’t want to inflict pain on voters and risk long term damage to the economy. Some tax cuts will be extended but they will depend on who wins in the upcoming presidential election.
During the next four months, Democrats and Republicans hope to use the issue to their advantage. Democrats emphasize that the high earners make up the top 2 percent of the income scale while the Republicans view them as the job creators.