Obama to extend higher taxes for the rich

US President Barack Obama has defended his administration's push for extension of a payroll tax break package, which has run into a Republican roadblock in Congress, emphasising the widening inequality between the rich and middle class in America.

"I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, when everyone plays by the same rules," he said in a high school gym at Osawatomie, the same small Kansas town where President Theodore Roosevelt delivered his pivotal 'New Nationalism' speech over one hundred years ago.

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The payroll tax holiday was enacted last year and mandates higher taxes for the wealthy, while reducing social security payments for middle class Americans.

It is set to lapse at the end of this year, unless an extension is granted.

According to the New York Times, if extended, the payroll tax break would reduce how much employees pay for Social Security to 3.1 per cent from the already reduced level of 4.2 per cent vis-a-vis the norm of 6.2 per cent.

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Under the Democratic proposal, which Republicans have blocked, the cut that would go to most working Americans would be offset in the Budget by a 1.9 per cent surtax on those with modified adjusted gross incomes of more than $1 million.

"These aren't Democratic values or Republican values. These aren't 1 per cent values or 99 per cent values. They're American values and we have to reclaim them," Obama said.

"Throughout the country, it's sparked protests and political movements, from the tea party to the people who've been occupying the streets of New York and other cities," Obama was quoted as saying by USA Today.

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"This is the defining issue of our time," he said in the Republican state, echoing words spoken by President Theodore Roosevelt in 1910.

Noting that his mother and grandparents hailed from Kansas, the President said, "This isn't just another political debate."

"This is a make-or-break moment for the middle class and all those who are fighting to get into the middle class," Obama said. "At stake is whether this will be a country where

working people can earn enough to raise a family, build modest savings, own a home and secure their retirement."

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If Congress takes no action, the tax will revert back to 6.2 per cent next month. Opposing the Republicans, Obama said, "Their philosophy is simple: 'We are better off when everyone is left to fend for themselves and play by their own rules'. I am here to say they are wrong."

Anger about income inequality and a shrinking middle class has led to a variety of political protests, Obama said, from the Tea Party conservatives to Occupy Wall Street liberals who describe themselves as "99 per cent" of Americans.