The tax cuts in question were initially proposed by President George W. Bush and passed by Congress in 2001 and 2003, but the law came with a 2010 expiration date. President Obama and Republicans worked out a deal to extend the Bush era tax cuts in 2010 for another two years, bringing the country to the current predicament.
Democrats and Republicans have made little headway in fiscal cliff negotiations. Obama has dug in on the imperative to extend the rates for middle class earners while allowing the tax cuts for the wealthy expire.
"I'm not going to sign any package that somehow prevents the top rate from going up for folks in the top 2 percent," Obama said during a visit with a middle class family in northern Virginia Thursday.
"The only obstacle standing in the way of middle-income tax relief are the Republicans' unwillingness to ask the top 2 percent to pay their fair share," House Democratic Leader Nancy Pelosi said Friday. "This is a moment of truth. The clock is ticking. Christmas is coming. The goose is getting fat. But in many homes across America, it's very -- a very, very lean time."
But Republicans are not willing to budge on the issue and are calling for the president to agree to greater cuts to entitlement spending.
"There are a lot of things that are possible to put the revenues that the president seeks on the table, but none of it's going to be possible [if] the president insists on his position, insists on 'my way or the highway,'" House Speaker John Boehner said Friday. "That's not the way to get to an agreement that I think is important for the American people and very important for our economy."
Want to see how each of the plans would affect your taxes? The Tax Policy Center has a calculator that shows the impact each plan will have on your taxes.
Read more about the Fiscal Cliff: