Congress Deal Averting Tax Increase Curbs Risk to States

The agreement passed by Congress to keep taxes from increasing on most U.S. workers in 2013 eases a threat to states and cities only now emerging from the fiscal crisis brought on by the eighteen-month recession.

A day after the income-tax rate increases kicked in, the House of Representatives approved a Senate bill to block higher levies on everyone earning less than $400,000 and delay automatic budget cuts. State and local government officials had said inaction would deal a setback to the economy, hammering revenue and undermining a newfound financial stability.