Barack Obama will call on Congress today to enact a one-year extension of Bush-era tax cuts for the middle class.
Media accounts of Obama’s mandate indicate that the president’s tax relief plan would pertain to families making less than $250,000.
If Congress does not OK the prez’s pitch, this could pinch a lot of Americans’ pockets come Jan. 1, when the cuts officially expire: as detailed by the New York Times, a household pulling in 50K would have to pay an additional $1,750 to Uncle Sam.
You might wonder: What else do the cuts’ expiration mean for you and the rest of the U.S.?
Well, a lot economists have mixed feelings on the specific potential impacts; generally speaking, however, they worry that the cuts’ cancellation could deal a damaging blow to an already floundering economy.
Hence the financial event’s unofficial title, “Taxmageddon.”
Taking inflation into account, after-tax income for these households would sink to 1998 levels, the New York Times notes.
Poor families would also pay more in taxes, as would the super rich.
At the same time, spending cuts would also be put into place, affecting education, transportation, and national defense, the Times notes.
So yeah…there’s def a case to be made that the cuts are pretty necessary.
However, they probably won’t get put into place.
Obama has long butted heads with Congressional Republicans on the tax cut issue, as they want to extend the tax cuts for all income groups — including the wealthy, as detailed by the Wall Street Journal.
Meanwhile, he’s even gotten opposition from his own political party, as key Democrats want to extend the cuts to households earning $1 million and under.
Regardless of whether it succeeds, Obama’s proposed mandate will likely be felt in November.
As analysts have argued, the president is pitching this idea at a time when he really needs the electorate to focus on something besides the economy, which is not recovering as he would have hoped — the strategic schtick is to get people thinking about tax fairness, not unemployment.
Also, Republican opposition to Obama could position the G.O.P as out-of-touch with America’s middle class.
Obama is scheduled to make an announcement on tax cut extension shortly before noon.
Check back for updates.
Follow Victoria Bekiempis @vicbekiempis.