LawFuel.com – The Fiscal Cliff crisis may appear to have averted a crisis, but tax and legal issues apart from potential problems in the House of Representatives mean it is likely to create continued problems for the American taxpayer.
The last minute deal that was struck by the leaders of the Senate and the White House lead to a vote due before midnight by Senators.
The Toronto Star reports that independent Senator Joe Lieberman said it had strong support from the Democrats who control the chamber.
The agreement still came too late for Congress to meet its own deadline of midnight New Year’s Eve to pass laws halting $600 billion in tax hikes and spending cuts due to come into force on Jan. 1.
But with Tuesday a holiday — and the world’s financial markets closed — Congress still had time to draw up legislation, approve it and backdate it to avoid the harsh fiscal measures coming into force.
“That will need the backing of the House of Representatives, where many of the Republicans who control the chamber complain that President Barack Obama has shown little interest in cutting government spending to try to reduce the U.S. budget deficit.
House Republicans are also likely to baulk at planned tax hikes on household incomes over $450,000 a year that was part of the agreement hammered out by Vice-President Joe Biden and Senate Republican Minority Leader Mitch McConnell. The House has convened a session for Tuesday at noon.
The deal would make permanent the alternative minimum tax “patch” that was set to expire, protecting middle-income Americans from being taxed as if they were rich.
Indiscriminate spending cuts for defence and non-defence spending were simply postponed for two months.
As New Year’s Day approached, members were thankful that the financial markets were closed, giving them a second chance to return on Tuesday to try to blunt the worst effects of the fiscal mess.
There is no major difference whether a law is passed on Monday night, Tuesday or Wednesday. Legislation can be backdated to Jan. 1, for instance, said Mary Burke Baker, a partner at law firm K&L Gates, who spent decades at the Internal Revenue Service.
“This is sort of like twins and one being born before midnight and one being born after. I think the date that matters is the day president signs the legislation,” she said.
Whatever the outcome of the events today, it is apparent that some major budget and political issues, quite apart from legal ones, from the fiscal cliff problems faced over the New Year.