Obama urges Congress to extend middle class tax cuts

US President Barack Obama urged the Congress to extend the middle class tax cut that is set to end this month.

He also said Republicans must ask the wealthiest Americans to pay higher tax rates.

In his weekly address to the nation, Obama said time is running out given that the middle-class tax cuts are set to expire before the year-end.

"There are two things that can happen," he said. "First, if Congress does nothing, every family in America will see their income taxes automatically go up on January 1.

A typical middle-class family of four would get a $2,200 tax hike. That would be bad for families, it would be bad for businesses, and it would drag down our entire economy," he said.

Obama said the Congress can avoid all this by passing a law that prevents a tax hike on the first $2,50,000 of everybody's income.

"That means 98 per cent of Americans and 97 per cent of small businesses wouldn't see their income taxes go up by a single dime. Even the wealthiest Americans would get a tax cut on the first $250,000 of their income. And families everywhere would enjoy some peace of mind," he said.

Noting that the Senate has already done their part, he said the Republicans who have majority in the House of Representatives must do the same thing.

"So far, they've put forward an unbalanced plan that actually lowers rates for the wealthiest Americans. If we want to protect the middle class, then the math just doesn't work," he said.

"We can and should do more than just extend middle class tax cuts. I stand ready to work with Republicans on a plan that spurs economic growth, creates jobs and reduces our deficit – a plan that gives both sides some of what they want.

"I'm willing to find ways to bring down the cost of health care without hurting seniors and other Americans who depend on it. And I'm willing to make more entitlement spending cuts on top of the $1 trillion dollars in cuts I signed into law last year," Obama said.

"But if we're serious about reducing our deficit while still investing in things like education and research that are important to growing our economy, and if we're serious about protecting middle-class families, then we're also going to askthe wealthiest Americans to pay higher tax rates. That's one principle I won't compromise on," he said.

This was a central question in the election, the President said.

"A clear majority of Americans – Democrats, Republicans and Independents – agreed with a balanced approach that asks something from everyone, but a little more from those who can most afford it. It's the only way to put our economy on asustainable path without asking even more from the middle class. And it's the only kind of plan I'm willing to sign," Obama said.