There has been a Christmas boost for US President Barack Obama’s bid for re-election in 2012 after he signed a law extending a payroll tax cut by two months.
A vote in Congress on Friday saw Republicans accept the Democrat proposal of keeping the tax at 4.2 per cent and axing the increase to 6.2 per cent that was supposed to begin in January.
Obama would like the lower rate and unemployment insurance to remain throughout next year and he put the pressure on Congress to make this happen.
“When Congress returns, I urge them to keep working, without drama, without delay, to reach an agreement that extends this tax cut, as well as unemplyoment insurance, through all of 2012,” he said.
If the bill had not been extended, roughly 160 million Americans would have faced higher taxes in January, with the average family having to pay 1,000 dollars more a year, according to the White House.
However, it will be harder to keep the lower tax rate for all of 2012 due to arguments between the two parties over how it should be funded.