Without an agreement, every individual, household and business in Colorado would pay higher taxes in 2013. Additionally, 31,000 unemployed state residents would get no federal unemployment benefits next year. And federal spending on everything from military bases to Head Start could see deep budget cuts beginning Jan. 1.
President Barack Obama said on New Year's Eve that a deal to avoid the so-called fiscal cliff was "within sight," but cautioned that more work is needed to reach a long-term agreement to tame the federal debt and deficit.
The fiscal cliff negotiators -- Vice President Joe Biden and Senate Minority Leader Mitch McConnell of Kentucky -- were finalizing a package under which individuals earning more than $400,000 and households making over above $450,000 would face a tax rate of 39.6 percent, up from the current 35 percent.
The emerging plan would also raise the tax on estates worth $5 million or more to 40 percent from 35 percent, extend unemployment benefits for 2 million people for another year and prevent the Alternative Minimum Tax from hitting millions of additional middle-class taxpayers.
Obama had campaigned on raising rates on individuals earning $200,000 or more and households making at least $250,000.
Shortly after Obama spoke, McConnell said on the Senate floor that he and Biden have reached an agreement on the tax portion of the deal. He acknowledged that the two sides are still apart on how to avert automatic spending cuts of $109 billion in fiscal 2013.
A fiscal cliff vote was possible in the Democratic-majority Senate before the midnight deadline, but maybe not in the Republican-majority House. House Republican leaders told their members Monday afternoon that the chamber isn't expected to vote on a final deal before midnight, but they added that the situation is "very fluid."
GOP leaders in the House said they will vote on other bills Monday, giving them all of New Year's Day to consider a deal to avert the automatic tax hikes and spending cuts.
About 0.57 percent of Colorado filers would pay higher federal income taxes for 2013 if Congress passes the emerging deal.
According to the Internal Revenue Service, 13,566 Colorado filers reported adjusted gross incomes of at least $500,000 in 2010. That's out of a total of 2,369,949 returns filed by Coloradoans that year.
A total of 56,282 Colorado filers paid the Alternative Minimum Tax in 2010, IRS figures show. Of those, 54,363 earned at least $100,000 a year. In the absence of an AMT "patch" in the fiscal cliff deal, the tax would hit thousands of Coloradans earning under $100,000 a year.
Extending unemployment would ensure that jobless Coloradans who were to receive their final federal payments in early January would continue to receive support until they exhaust all their benefits.
A total of 1,394 people in Denver County, 1,263 in El Paso County, 1,098 in Arapahoe County, 1,051 in Adams County, 920 in Jefferson County, 430 in Larimer County, 428 in Weld County, 378 in Boulder County, 318 in Douglas County and 83 in Broomfield County were cut off from extended federal unemployment benefits on Dec. 29 though they had a few more weeks of eligibility left.
By RAJU CHEBIUM, Gannett Washington Bureau
(KUSA-TV © 2012 Multimedia Holdings Corporation)