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Obama pushes middle-class tax relief

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President Barack Obama has called for a one-year extension of tax cuts for families earning less than $250,000 a year, seeking to put Republicans on the defensive ahead of the November presidential election.

Obama's proposal, which attempts to reinforce his campaign mantra of being a middle-class champion, is unlikely to sway his opponents in Congress, who have argued consistently that the tax cuts passed by Obama's Republican predecessor should stay in place for everyone, including wealthy Americans.

White House spokesman Jay Carney told reporters after Obama's remarks on Monday that the president would veto any bill that extended the tax cuts across the board.

"Let's not hold the vast majority of Americans and our entire economy hostage while we debate the merits of another tax
cut for the wealthy," Obama said at the White House, standing in front of a riser filled with people who he said would be hurt if their tax cuts were not extended.

Republicans charge that allowing taxes to rise for higher-earning Americans would hurt small business owners who are helping to create jobs in a tough economy, but Obama argued that 97 per cent of all small business owners would fall under the $250,000-a-year income threshold.

"This isn't about taxing job creators, this is about helping job creators," Obama said.

Whether it gains traction or not, the Democratic incumbent's move achieves several political goals.

It shifts the campaign conversation - at least for a day - from last week's meager jobs report and his handling of the economy to "tax fairness" and inequality in America.

It burnishes Obama's message of being the candidate who backs the middle class while Republicans and their presumptive presidential nominee, Mitt Romney, favour the wealthy.

It also sets a baseline for what is likely to be a months-long debate about deficit reduction.

Obama 'doesn't have a clue'

The tax cuts enacted by Republican President George W. Bush, Obama's predecessor, will expire on January 1 without congressional action, part of a so-called fiscal cliff that could hit the US economy alongside deep automatic spending cuts.

Romney has suggested Congress wait to act on the issue until January, when he hopes to take office.

His campaign said on Monday Obama's move would amount to a "massive tax increase" on families, job creators and small businesses.

"It just proves again that the president doesn't have a clue how to get America working again and help the middle class," Romney spokeswoman Andrea Saul said.

Aside from the Republican reaction, Obama's move holds political pitfalls among his fellow Democrats, who are divided about how to address the issue.

House of Representatives Democratic leader Nancy Pelosi has suggested that the income threshold for extending tax cuts be set at $1 million a year rather than the $250,000 limit Obama wants.

Some Democrats oppose any extension, while others are wary of allowing taxes to rise for higher earners because of its economic impact.


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