Wall Street Journal (01/02/13) Janet Hook
The House of Representatives late Tuesday passed and sent to President Obama legislation to avert big income tax increases on most Americans and prevent large cuts in spending on government programs. The measure, brought to the House floor less than 24 hours after its passage in the Senate, was approved 257 to 167, with 85 Republicans joining 172 Democrats in voting to allow income taxes to rise for the first time in two decades, in this case for the highest-earning Americans. Voting no were 151 Republicans and 16 Democrats. The bill was expected to be signed quickly by the president. The legislation allows taxes to go up on household income over $400,000 for individuals and $450,000 for couples, marking the first time in more than two decades that a broad tax increase has been approved with Republican support.
The compromise dodges one cliff, but it sends Congress heading toward another. In two months, the delayed $110 billion in spending cuts will again kick in. At the same time, the U.S. will face the need to increase its borrowing limit, a change that can only be made by Congress. That sets up another potential fight, one with possibly more damaging consequences. Republicans want to use the debt ceiling to extract spending cuts, but the president has said he will not negotiate on that issue. The two-percentage-point payroll-tax break that existed for 2011 and 2012 expired on Dec. 31 and was not revived by lawmakers.
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