US Goes Over the Fiscal Cliff Despite Efforts by Senate
The Senate worked hard in trying to avert the tax increases and spending cuts due to the so-called fiscal cliff. The US House of Representatives are likely not to vote on a Senate plan before midnight and this could push a legislative move into New Year’s Day.
The Senate plan was heavy on tax increases and little on spending cuts. This would not appeal the Republicans in the House. It would increase the income tax on high income earners but leave the current tax rates on the rest of American taxpayers.
Senate Democrats worried that the plan didn’t go far enough in taxing the rich taxpayers. They asked for a meeting with Vice President Joe Biden to have him explain his meetings with Republican Senate Minority Leader Mitch McConnell.
If Congress fails to pass a measure, around $600 billion in government spending and tax increases would take effect on January 1. This could possibly lead the nation into another recession. Lawmakers could still vote for a deal on New Year’s Day or later in the week in order to prevent the worst of the fiscal cliff’s effect.
The House is set to reconvene on Tuesday according to Republican Representative Steven LaTourette. He added that the House members had been told to stay close on Monday evening and that they might be called upon to continue with the negotiations.
According to the Senate plan, income over $450,000 per household or $400,000 per individual would be taxed at 39.6 percent. This is an increase from the current 35 percent. Below the said incomes, they will be taxed the same as the present rates that were placed during former President George W. Bush.
The Senate plan also increases estate taxes on inherited wealth and fixes the alternative minimum tax so that it would not threaten millions of middle-income Americans each year. The plan also delays the across the board spending cuts in domestic and defense programs for two months.