7 Dec 2010

Obama compromises to get tax cuts extended

6:33 pm on 7 December 2010

United States President Barack Obama has reached a deal with Congressional Republicans to extend tax cuts for a further two years at all income levels.

The deal forms part of a package that will also include an extension of benefits for the long-term unemployed, the BBC reports.

Mr Obama says it is important not to increase taxes for lower and middle income earners.

Referring to the bitter wrangling over the issue, Mr Obama said he would not "let working families become collateral damage for political warfare".

Some Democrats have said the deal, which must be voted on by Congress, is too generous to the wealthy.

The BBC says the deal marks a reversal of Mr Obama's position, first laid out in his 2008 campaign, that tax cuts should only be extended at incomes up to $US200,000 for individuals and $US250,000 for couples.

Mr Obama says there are elements of the deal that he opposes - including an extension of tax cuts for the wealthiest 2% of Americans.

But he says striking a deal with Republicans is more important than allowing the tax cuts to expire on 1 January 2011 amid a political stalemate.