Democrats Revise Obama Jobs Bill With a New Tax on Millionaires

Hoping to win Democratic support for the president's jobs bill, Senate Majority Leader Harry Reid today announced he's tweaking the $447 billion plan by substituting some of Obama's provisions for a tax increase on the "richest of the rich," those earning $1 million a year or more.

"The American people believe it is time for millionaires and billionaires to pay their fair share to help this country thrive," Reid said on the Senate floor this morning. "So when Democrats bring this commonsense job legislation to the floor, we'll ask Americans who make more than $1 million a year to contribute more to help this country reduce its jobs deficit."

The move would throw out the pay-for provisions that were listed in the White House's American Jobs Act, and now include a 5 percent tax increase on millionaires. The 5 percent surtax on a millionaires' earned income would not be permanent but would last for the next 10 years, and would provide the funds for the jobs bill, Reid said today.

Obama had proposed higher taxes on family incomes greater than $250,000 and on the oil and gas industry as a way to pay for the bill. Some Democrats, such as Sen. Chuck Schumer, D-N.Y., faced constituents who would have been hit hard by the higher tax rates, so the tax increase became a surcharge on millionaires, and will likely win over Democratic votes.

"Drawing the line at a million dollars is the right thing to do," Schumer said at a press conference late this morning. "In the eyes of many, it is hard to ask more of households that make $250,000 or $300,000 a year. Many of -- 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."

The Democratic leadership believes it has an "overwhelming majority" of Democrats for this bill now, although they said there has not been a proper whip count yet.

"We have spent the last several weeks planning how it can win the most votes on the Senate floor as one package," Schumer said, "So we believe the best way to ensure this worthy package does not add to the deficit is to get rid of unneeded tax breaks for millionaires and billionaires."

Democrats today said they had consulted with the White House over the change to the president's original proposal, and they were "fine with the idea," because the president was always open for alternative ways of paying for the bill.

Republicans will surely oppose this tax increase. Senate Minority Leader Mitch McConnell, R-Ky., said that Senate Democrats have decided to make the changes to the bill in order to "sharpen" their "political edge."

"Now our Democratic friends want to jettison entire parts of the bill altogether, not to make it more effective at growing jobs, not to grow bipartisan support. No, they want to overhaul the bill to sharpen its political edge," McConnell said. "So my suggestion to the White House is that if the president wants to keep traveling around the country demanding a vote on this second stimulus, that he focus his criticism on Democrats, not Republicans, because they're the ones who are now standing in the way of an immediate vote on this legislation."

Reid today was asked why he would propose this when he knows he will not have Republican support for the bill, nor would it go anywhere in the Republican-controlled House of Representatives.

"Seventy-five percent of Republicans support this tax. The problem is, none of them are in the Senate. So they're going to have to listen to their constituents," Reid said. "The Republicans have to make a decision. They can -- they can hang on to their mantra: no new taxes. But I would suggest that they're really not keeping in touch with their constituents."

The Democrats are setting up a contrast – hoping to cast a Republican vote against this as a vote to protect tax breaks for the wealthiest 1 percent of Americans instead of aiding in the economic recovery.

"The addition of this proposal makes it very tough for Republicans to oppose the president's job package," Schumer said. "Republicans will be hard-pressed to explain why they'd allow teachers and firefighters to be laid off rather than have millionaires and billionaires pay their fair share."

Reid said that he'd like to set up a first vote on this "very soon," likely within the next few days after finishing the China currency bill.