The tax cuts that had been benefitting a number of people would no longer be available to them as the U.S. Treasury Secretary Timothy F. Geithner has proposed to cease the tax rebates to compensate the fiscal deficits.
Geithner said, “Fiscal discipline requires hard choices and we must be prepared to make them. It’s not the prescription the economy needs right now, and the country can’t afford it.”
He further added that if the tax reductions are not taken back, the nation’s borrowing would increase to more than $700 billion in the next ten years.
The households, with income more than $250,000 a year would be experiencing no tax cuts, while those who earn less than that would be benefitted with the tax rebates of 2%, as earlier proposed. The new plan will be applied from December 31.
The reductions in the taxes got executed during former President George W. Bush’s administration in 2001 and 2003.
On Wednesday, the Senate leaders stated that they will have a discussion over the expiry of tax cut in the September session. There can be a pressurized situation for the Democrats and they may lose majority in the session over ban on tax cuts, as the Republicans are against a tax increase.
Democrats are of the view that nation’s debt would increase, if Republicans continue boosting the tax reductions for affluent people.