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WASHINGTON — Senate Democrats want to slap a new surtax on millionaires to pay for President Obama’s $447 billion jobs bill, scrapping the White House plan for a much broader tax hike.
The 5 percent surtax would hit all income over $1 million, including capital gains and dividends, to rake in about $445 billion over 10 years.
“Drawing the line at a million dollars is the right thing to do,” said Sen. Chuck Schumer (D-NY), adding that the proposal complied with Obama’s “Buffett rule” that the super rich should pay more taxes.
Obama named the rule after billionaire investor Warren Buffett, who famously complained that he wasn’t taxed enough.
But the president also wanted to raise taxes on families making more than $250,000 a year by limiting income-tax deductions they can take.
That didn’t sit well with rank-and-file Democrats.
Schumer said families that earn $250,000 or $300,000 a year aren’t rich enough to deserve extra taxes. He described them as “firmly in the middle class.”
“They are not rich, and in large parts of the country, that kind of income does not get you a big home or lots of vacations or anything else that’s associated with wealth in America,” he said.
White House Press Secretary Jay Carney said the president always has been open to different ways of paying for the bill.
“When we have to make choices between taking measures that create jobs … or giving preferential tax treatment to the wealthiest Americans — the president thinks the choice is clear,” Carney said.
Senate Majority Leader Harry Reid (D-Nev.) said he will schedule a vote on Obama’s jobs bill within days.
“We’re going to move to have the richest of the rich pay a little bit more,” he said. “Democrats have listened to the American people, and they have been very clear: It is time for millionaires and billionaires to pay their fair share to help this country thrive.”
The bill faces fierce resistance from Republicans, who say it is just a second dose of Obama’s failed stimulus spending.
Republicans also oppose any tax hikes during these tough economic times. They say higher taxes would blunt economic growth and further depress job creation.
Michael Steel, spokesman for House Speaker John Boehner (R-Ohio), said Democrats should instead focus on finding bipartisan plans to spur job growth.
“That should be our focus, not desperate tax-hike gimmicks floated to cover up divisions within the Democratic caucus,” he said.
The millionaires surtax, if enacted, would take effect Jan. 1. It would apply to 317,000 taxpayers or less than 1 percent of the population, according to Internal Revenue Service statistics cited by Senate Democratic officials.