Taxes under fiscal cliff could hurt retailers - White House
WASHINGTON (KABC) -- Potential tax hikes for middle class taxpayers under the looming fiscal cliff could hurt retailers during the holiday shopping season, a new White House report said.
Congress returned to session on Monday after the Thanksgiving holiday. Automatic tax increases and massive spending cuts will kick in if lawmakers can't reach an agreement by the end of the year.
The White House said if lawmakers don't halt the automatic increase in taxes for households earning less than $250,000, consumers might curtail their shopping during the current holiday season.
"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 says.
The study, which was issued by President Barack Obama's National Economic Council and his Council of Economic Advisers, also said a sudden increase in taxes would reduce consumer spending in 2013 by nearly $200 billion, significantly slowing the economic recovery.
The figures echo estimates by private forecasters and by the Congressional Budget Office.
Members of both political parties have said all options must be considered to reach an agreement.
"If we don't do anything, on Jan. 1, 2013, there's a lot more people paying a lot more," House Majority Leader Eric Cantor said.
The tax increases would do away with rates set during the administration of President George W. Bush and restore higher tax rates in place during President Bill Clinton's administration when the economy was robust.
President Obama wants the Bush-era tax rates to remain at their current level for households earning less than $250,000. He is calling on Congress to increase taxes for families earning more than that threshold.
The Associated Press contributed to this report.
president barack obama, economy, budget, republican party, national news
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