Senate Democratic leaders Wednesday called for a new 5 percent surtax on those with incomes of at least $1 million and said they’ll use it to pay for President Obama’s jobs-stimulus bill.
The surtax is designed to win support for Mr. Obama’s bill from wavering Democrats, many of whom had opposed the bill because of tax increases they said would hurt charitable giving and could bite small businesses.
Targeting those making $1 million a year is seen as a more politically palatable option.
“We’re going to move to have the richest of the rich pay a little bit more,” said Senate Majority Leader Harry Reid, Nevada Democrat.
Mr. Obama’s proposal calls for $447 billion in short-term infrastructure spending and tax cuts, offset by long-term tax increases that would raise $467 billion over 10 years. Those tax increases include eliminating tax breaks for oil and gas companies and limiting the deductions individual taxpayers could claim.
When Mr. Reid was asked whether Senate Democrats would support his plan to substitute the surtax for Mr. Obama’s taxes, he said, “We’ll get most of them.”
The White House is open to considering the surtax, which Mr. Reid said would raise $445 billion annually, as a way to pay for the jobs package but stopped short of giving it a full endorsement.
“The Senate Democrats have put forward a different idea that we think would work,” White House press secretary Jay Carney said.
But Mr. Reid’s proposal will come up against strong opposition from Republicans, who generally reject tax increases of any kind.
“Seventy-five percent of Republicans support this tax,” Mr. Reid said. “The problem is, none of them are in the Senate.
“Republicans have to make a decision. They can hang onto their mantra: no new taxes. But I would suggest that they’re really not keeping in touch with their constituents.”
Sen. Orrin G. Hatch of Utah, the senior Republican on the Senate Finance Committee, said the proposed surtax, like a similar one for couples earning at least $1 million that was rejected by the previous Congress, would trickle down to hurt small businesses.
“The definition of insanity is doing the same thing over and over again expecting different results,” Mr. Hatch said. “This tax hike was a bad idea in 2009, and it’s a bad idea today.”
Senate Minority Leader Mitch McConnell, Kentucky Republican, has vowed to fight against the president’s bill.
The House’s No. 2 Democrat said he believes Mr. Reid’s proposal would have support among his caucus.
“We’ll certainly consider it over here and would be very pleased to support it,” said House Minority Whip Steny H. Hoyer of Maryland. “In fact, some of our members may like that alternative better.”
But even if the measure passed the Democrat-controlled Senate, it faces little chance of survival in the House. House Majority Leader Eric Cantor, Virginia Republican, has said the package would be dead on arrival if it reached the GOP-run chamber.
“Here we go again — continued insistence that somehow Washington needs to raise taxes on job creators right now,” Mr. Cantor told Bloomberg. “I think most people in America think it’s counterintuitive to raise taxes if you want economic growth.”
• Sean Lengell can be reached at slengell@washingtontimes.com.
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