In the United States a Republican plan to avoid the so-called Fiscal Cliff has been abandoned after it failed to earn enough party support.

The House of Representatives was due to vote on "Plan B" which would limit tax rises to those earning more than US$1 million a year.

However it was called off because of a lack of support from both Democrats and Republicans.

Bi-partisan talks will now resume on a new plan to avoid the cliff.

It would see US$600 billion worth of spending cuts and tax increases introduced in the New Year which would threaten to send the US back into recession.

$1.2 trillion in new tax revenue

US President Obama had originally insisted on letting tax cuts expire on households earning more than US$250,000 but has since upped the threshold to US$400,000 in a bid to reach a compromise.

The plan offers US$1.2 trillion in new tax revenue with just under US$1 trillion in spending cuts.

But Newstalk's Business Editor Ian Guider told Breakfast that both sides are still very far apart.

But what is the Fiscal Cliff? Watch it explained below: