US President Barack Obama on Monday outlined plans to extend for one-year tax cuts to all but the wealthiest Americans, dpa reported.
The proposal would extend tax cuts put in place under his predecessor, George W Bush, to households earning less than 250,000 dollars per year.
"Let's not hold the vast majority of Americans and our economy hostage while we debate the merits of another tax cut for the wealthy," Obama said in the White House, calling on Congress to first extend the tax cuts for most Americans before discussing tax cuts for the rich.
The White House portrayed the move as a bid to help middle class Americans. But, in practice, it would extend the tax cuts for nearly all taxpayers, with only roughly 4 per cent of households earning more than 200,000 dollars per year, according to Census Bureau figures.
Obama said it would benefit 98 per cent of Americans and said wealthy Americans should pay more to deal with the country's deficit. Republicans in Congress have argued for an extension of all the Bush-era tax cuts, which are due to expire at the end of the year, arguing that removing them would further damage an already weak economy and hurt small businesses and job creators.
The lower Republican-controlled House of Representatives is expected to vote on the matter later this month. However, a complete extension stands little chance in the Democratic-controlled upper Senate.
Obama has sought to portray an increase in taxes on the highest earners as a matter of fairness as he seeks another four-year term in office against Republican challenger Mitt Romney.
Romney has blasted Obama on his economic record, including unemployment figures stalled at 8.2 per cent.