WASHINGTON – The contours of a deal to avert the ‘fiscal cliff’ emerged Monday, with Democrats and Republicans agreeing to raise tax rates on family income over $450,000 a year, increase the estate tax rate and extend unemployment benefits for one year, officials familiar with the negotiations said.
But with a midnight deadline rapidly approaching, both sides were at an impasse over whether to put off automatic, across-the-board spending cuts set to take effect on Jan. 1, and if so, how to pay for that. Democrats want to put off the cuts for one year and offset the so-called sequester with unspecified revenue.
Officials emphasized that negotiations were continuing and the emerging deal was not yet final. President Barack Obama was to speak about the status of the negotiations from the White House early Monday afternoon.
The proposal in the works would raise the tax rates on family income over $450,000 to 39.6 per cent, the same level as under former President Bill Clinton. Also, estates would be taxed at 40 per cent after the first $5 million, up from 35 per cent to 40 per cent. Unemployment benefits would be extended for one year.
A Republican official familiar with the plans confirmed the details described to The Associated Press.
The officials requested anonymity in order to discuss the internal negotiations.
Urgent talks were continuing Monday afternoon between the White House and congressional Republicans, with longtime negotiating partners Vice-President Joe Biden and Senate Republican leader Mitch McConnell at the helm.
An agreement on the proposed deal would also shield Medicare doctors from a 27 per cent cut in fees and extend tax credits for research and development, as well as renewable energy.
The deal would also extend for five years a series of tax credits meant to lessen the financial burden on poorer and middle-class families, including one credit that helps people pay for college.
The deal would achieve about $600 billion in new revenue, the officials said.