A key point of contention during the fiscal cliff negotiations has been the level of taxation—specifically marginal tax rates—on people earning higher incomes. For the first time, a potential compromise has been proposed on this thorny issue. House Speaker John Boehner suggests increasing the top marginal tax rate from 36 percent to 39.6 percent on incomes over $1 million. President Obama seeks to raise the rate on incomes over $250,000, a much lower threshold than the Speaker’s compromise offer. If no agreement is reached before the end of the year, marginal income tax rates will increase for all tax payers regardless of income.
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