Squabbling politicians in the US have managed to delay an economic nightmare of substantial tax rises and spending cuts, as its richest citizens alone are set to bear the weight.
The so called ‘fiscal cliff’ was averted at the eleventh hour, after crisis talks between Republicans and Democrats managed to agree on a tax rise for only the highest earning of US citizens.
President Barack Obama told a White House press conference: ‘I will sign a law that raises taxes on the wealthiest 2% of Americans... while preventing a middle-class tax hike.’
The deal will mean those earning $400,000 (£246,000) or more will be impacted by income tax rise to 39.6%, though Democrats had initially been pushing for earners as low as $250,000 to also be affected by the hike.
Another feature of the compromise agreement will see inheritance tax rises of 5% after the first $5m for individuals ($10m for a couple),
Upon news that the Senate and the House of Representatives voted through the bill, financial markets around the world reacted positively with the FTSE 100 share index even surpassing the 6,000 benchmark for the first time in 17 months on the back of the news.
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