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Fiscal cliff may trim consumer confidence
Source: Agencies |
November 27, 2012, Tuesday
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Print Edition
Print Edition
WHITE House economists warned yesterday that the uncertainty of a potential hike in taxes next year for middle-class taxpayers under the looming fiscal cliff could hurt consumer mood during the crucial Christmas holiday shopping season.
In a new report that coincides with US Congress' return after the Thanksgiving holiday, the White House said that if lawmakers don't halt the January 1 automatic increase in taxes for households earning less than US$250,000, consumers might cut their shopping in advance.
Across-the-board tax increases and deep spending cuts will take effect, with the possibility of driving the country into another recession, if US President Barack Obama and a divided Congress can't reach a deal by the end of the year to avoid them.
The holiday shopping season started in earnest on Thursday, the Thanksgiving holiday.
"As we approach the holiday season, which accounts for close to one-fifth of industry sales, retailers can't afford the threat of tax increases on middle-class families," the report said.
The study by Obama's National Economic Council and his Council of Economic Advisers also said a sudden increase in taxes for middle-income taxpayers would cut consumer spending in 2013 by nearly US$200 billion, sharply slowing the economic recovery.
The figures echo estimates by private forecasters and by the Congressional Budget Office.
Congress and Obama have until the end of the year to avoid across-the-board tax increases that would do away with rates set during the administration of President George W. Bush and restore higher tax rates that were in place during President Bill Clinton's administration, when the economy was robust, the federal government had a budget surplus and the country was not at war.
According to the report, a married couple earning between US$50,000 and US$85,000 with two children would see a US$2,200 rise in their taxes.
Obama wants the Bush-era tax rates to remain at their current level for households earning less than US$250,000. He is calling on Congress to increase taxes for families earning more than that threshold.
In a new report that coincides with US Congress' return after the Thanksgiving holiday, the White House said that if lawmakers don't halt the January 1 automatic increase in taxes for households earning less than US$250,000, consumers might cut their shopping in advance.
Across-the-board tax increases and deep spending cuts will take effect, with the possibility of driving the country into another recession, if US President Barack Obama and a divided Congress can't reach a deal by the end of the year to avoid them.
The holiday shopping season started in earnest on Thursday, the Thanksgiving holiday.
"As we approach the holiday season, which accounts for close to one-fifth of industry sales, retailers can't afford the threat of tax increases on middle-class families," the report said.
The study by Obama's National Economic Council and his Council of Economic Advisers also said a sudden increase in taxes for middle-income taxpayers would cut consumer spending in 2013 by nearly US$200 billion, sharply slowing the economic recovery.
The figures echo estimates by private forecasters and by the Congressional Budget Office.
Congress and Obama have until the end of the year to avoid across-the-board tax increases that would do away with rates set during the administration of President George W. Bush and restore higher tax rates that were in place during President Bill Clinton's administration, when the economy was robust, the federal government had a budget surplus and the country was not at war.
According to the report, a married couple earning between US$50,000 and US$85,000 with two children would see a US$2,200 rise in their taxes.
Obama wants the Bush-era tax rates to remain at their current level for households earning less than US$250,000. He is calling on Congress to increase taxes for families earning more than that threshold.
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