By LINDSAY ALEXANDER
The clock is ticking. Congress has 29 days to come up with a solution before being pushed over “the fiscal cliff.”
Congress needs to approve a bill for a new tax plan. Without this measure, approximately 90 percent, according to a Tax Policy Center, study of American households will face tax hikes due to expiration of the Bush tax cuts. Spending cuts will begin on Dec. 31 under the Budget Control Act of 2011. The Congressional Budget office has predicted that the outcome of these changes could cause a recession.
Democrats want to see the Bush tax cuts officially expire, but Republicans want legislation to extend them. Republicans insist the new bill contain entitlement program cuts, but Democrats hold that those areas should not be touched. According to a CNN Poll, 67 percent of Americans want a mix of spending cuts and tax increases.
“I’m glad that Congress is finally forced to deal with this debt issue that can potentially destroy our economy. The fiscal cliff is kind of like chemotherapy for a patient with cancer—not a fun thing to do, but you have to do it,” Economics teacher Richard Houston said.
Houston also says the Democrat tax plan of taxing the rich will do very little to lower the trillion dollar plus yearly government deficits. Democrats wish to raise taxes on individuals making $200,000 or more after deductions and couples making $250,000 or more after deductions. Republicans maintain that the tax cuts should be for every class, and that by giving the rich tax cuts, the economy will be stimulated. Yet, according to a New York Times story, “Your Coming Tax Cut (Or Not),” extension of the tax cuts means $2.7 trillion less for the United States treasury per year.
According to the same article, since 2004, people in the income bracket of less than $10,000 saved $335 under the Bush tax cuts. Members of the middle class tax bracket of $40,000 to $49,000 saved $7,040 since 2004. The 0.1 percent of taxpayers who make $7.7 million or more per year saved $2,326,607 since 2004.
In contrast, President Obama’s tax plan would increase upper class taxes to keep middle class tax rates low.
“I think only the upper 2 percent should lose its Bush era tax breaks. This will generate more government revenue while protecting the middle class and allowing it to continue to grow,” senior Advanced Placement Economics student Rebecca Burns said. “The top 2 percent can afford to pay a little more back to the country that has allowed it flourish.”
Negotiators are now considering raising tax rates on the wealthy but not raising the top tax rate. This compromise lets Democrats say they raised taxes, and lets Republicans say the taxes were not raised on the rich. Regardless, Congress is inching closer to the edge, and a decision must be reached by the New Year.