It's been back and forth between the House of Representatives and the Senate for months, as they try to reach an agreement on the extension of the low tax rates implemented by President George W. Bush, and avoid a fiscal cliff.
However as the December 31 deadline fast approaches, there TMs still no agreement.While democrats want to keep current tax rates for the majority, and raise taxes for only those with a yearly income of $250,000 and higher, republican Congressman Blake Farenthold, of Corpus Christi, said that proposal would be bad for business.
"(It) would truly put a damper on the growth of the economy, because a lot of those tax returns that show over $250,000, aren't people that are taking that money home and spending it, Farenthold said. But they are small businesses that file their income taxes on their individual returns."
If January 1 rolls around with no agreement reached, the Committee on Ways and Means estimates the following tax increases. A family of four earning $50,000 a year, would pay about $2,200 more in taxes; a single mother with an income of $36,000 would see an increase of about $1,100 in taxes; and a senior citizen couple would pay about $1,700 more in taxes.
They also estimate parents would only see about a $500 tax credit per child on tax return, instead of the current $1,000.
"Washington has a spending problem not a taxing problem, Farenthold said. So a part of the equation has also got to be reduced spending, and none of the proposals we have seen include any real cuts in spending."
The congressman adds the Senate has to offer some kind of balanced proposal and not just ask for more taxes from the wealthy.
"There's a lot of room for cuts, go no further than the president's own Bowles-Simpson Commission that recommends all sorts of cuts, he said. That would be a great place to start."