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House prepares to vote on extending tax cuts amid fear of ‘fiscal cliff’

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Betsi Fores The Daily Caller News Foundation
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The House of Representatives is preparing to vote on the Job Protection and Recession Prevention Act in an effort to extend all Bush-era tax cuts amid concern that tax increases would endanger the weak economic recovery.

Last week, the Senate passed an extension of tax breaks for individuals earning less than $200,000 or joint-filers earning less than $250,000 in a near party-line vote. A bill that would extend the tax cuts for everyone, however, failed to get enough votes to pass.

The Bureau of Economic Analysis released GDP numbers for the second quarter of this year on Friday. “Real gross domestic product… increased at an annual rate of 1.5 percent in the second quarter of 2012,” the report said. That is down from two percent in the first quarter.

“I think we’re stuck in a negative cycle where weak employment suppresses incomes which suppresses consumption, investment, and growth, feeding back into weak hiring,” Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, wrote in response to the BEA’s latest release.

Continued news of sluggish hiring and slow growth, both domestic and international, draws concern from politicians and business owners alike.

“At the beginning of 2013, a large number of Federal tax provisions will expire, raising taxes across the board. Tax rates on income, capital gains and dividends, estates and payrolls will all rise and other tax provisions such as the child care credit are set to be cut back or eliminated,” said a report by the American Council for Capital Formation.

“The mix of deficit reductions in this ‘Fiscal Plan’ is approximately 60% tax increases, both higher tax rates and amounts, and 40% outlays, many of them through sequester and across-the board.”

The study concludes that aside from attempting to reduce the national deficit, “any tax increases would be undesirable given the current state of the U.S. economy.”

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Betsi Fores