The White House is heading back to the drawing board to determine the fate of the Bush tax cuts, amid fears Congress will not approve a plan to hike taxes on the nation's wealthiest families if Republicans take an expected House majority in next Tuesday's election, The Washington Post reported Saturday.
The Obama administration is mulling a strategy that would break apart the Bush tax cuts, according to sources familiar with the matter. The plan would call for a permanent extension of cuts for families earning less than $250,000 a year, and a temporary extension of cuts on income above that level.
The proposed "decoupling" of tax provisions would delay a decision on cuts for the so-called "rich" until next year or the year after, the sources said.
Republican leaders have pushed to extend the Bush tax cuts, which expire in December, for all income brackets, while President Obama insists that the country cannot afford to keep tax breaks on income over $250,000 a year for families, or $200,000 for individuals.
Partisan haggling blocked a vote on the cuts before elections, but Congress is expected to take-up debate again in mid-November, most likely with a new Republican majority in the House and additional GOP seats in the Senate.
While preferring a permanent extension across income brackets, Republican leaders have said they would accept a two-year extension of all the cuts.
White House officials confirmed they were reviewing a strategy for the lame-duck legislative session but declined to comment on decoupling or other compromises such as backing tax breaks for the rich in exchange for Republican approval of additional stimulus.
American taxpayers could see increased rates reflected in their January paychecks if Congress does not approve an extension before the end of the year.