Democrats seeking a deal to avert the year-end “fiscal cliff” are trying to etch into stone the signature economic achievement of Republican President George W. Bush by permanently extending tax cuts enacted during his tenure.
President Obama has put the extension of the tax cuts for most Americans at the top of his domestic agenda, a remarkable turnaround for Democrats, who had staunchly opposed the tax breaks when they were written into law about a decade ago.
With Obama leaving his Hawaii vacation for Washington Wednesday evening and lawmakers returning Thursday, the main dividing line between Republicans and Democrats has come down to whether tax rates should increase for top earners at the end of the year, when the Bush-era tax cuts are set to expire. While Republicans want to extend all the cuts, Democrats are pushing to maintain lower rates on household income below $250,000. Those lower rates significantly reduce the taxes of nearly all American households that earn less than $250,000 – and many who earn more, even if tax rates are allowed to increase on income above that figure.
While it is increasingly unlikely that the two parties will reach an agreement to avoid the fiscal cliff before Jan. 1, it is all but certain that their ultimate deal, whenever it comes, will make permanent the lower rates for most Americans.
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