It is believed that an agreement on tax deductions in the US might help resolve the prolonged disagreements over the issue fiscal cliff.

US President Obama said that there is a need to address the issues with the deductions to make the process simpler and easier. According to the Tax Policy Center (TPC), limiting tax deductions at $50,000 would help the government save $749 billion over 10 years. As the Republicans have held to their position of opposing higher taxes, the government might have a way out with deductions in order to reach a deal to resolve fiscal cliff.

The U. S. central bank chief said earlier that the uncertainty over the issue of fiscal cliff is putting pressure on the economic growth as investors are hindered by prospects of $600-billion in tax increases and spending cuts.

Experts say that the any capping in the mortgage interest deductions might be difficult for the housing market in the US, which has sated showing signs of improvement. The Federal Reserve Bank of New York said Tuesday said that American households were carefully working to reduce mortgage balances and are increasing other sorts of debt. Data showed that the total household debt fell by $74 billion to the level of $11.3 trillion during the three months till September, 2012.