With the elections over and Barack Obama returned to the White House for four more years, the attention of US politicians has turned to the so-called ‘fiscal cliff’ — a collection of tax hikes and spending cuts that threaten to send the country back into recession. But what exactly is going on, and why?
The Bush tax cuts
George W Bush passed two major tax cut packages during the first term of his Presidency: the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. Together, they lowered federal tax rates on income (for example, the top rate fell from 39.6 to 35 per cent, and the bottom rate from 15 to 10 per cent), capital gains and dividends. They also increased child tax credits, tax breaks for married couples and raised the amount of deductions high-earners could claim.
But the Bush administration couldn’t get the 60 votes it needed in the Senate to pass the cuts in ordinary bills without them being filibustered.
Britain’s best politics newsletters
You get two free articles each week when you sign up to The Spectator’s emails.
Already a subscriber? Log in
Comments
Join the debate for just $5 for 3 months
Be part of the conversation with other Spectator readers by getting your first three months for $5.
UNLOCK ACCESS Just $5 for 3 monthsAlready a subscriber? Log in