WASHINGTON – Senate Democratic leaders are proposing a 5 percent surtax on those earning $1 million a year as a new way to pay for President Obama’s jobs plan, turning to an issue with populist appeal as they line up support for a vote, possibly next week.

The shift is an acknowledgment that the president does not have support among his Democratic allies for taxing those earning less than $1 million. Obama’s proposal had relied on tax increases for households earning more than $200,000, or $250,000 for couples.

“We’re going to move to have the richest of the rich pay a little bit more,” Sen. Harry Reid, D-Nev., the majority leader, said Wednesday. A vote is expected “within the next few days,” he said.

Democratic leaders in the Senate have slow-walked the president’s proposal since it was first introduced last month, knowing they would have difficulty securing support from some within their ranks. Several conservative senators or those up for re-election next year have opposed any new taxes. Others argue that the upper-income tax hikes that Obama proposed would snare small-business owners.

Polls this fall have repeatedly shown that Americans overwhelmingly support higher taxes on millionaires who make up less than 1 percent of taxpayers, fewer than 500,000 households.

Republicans in the Senate are expected to launch a filibuster to block the bill. They have insisted on no new taxes.

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The surtax would hit all forms of income, including capital gains. It would fully cover the $447 billion cost of Obama’s plan.

The president is stumping around the country to build support for his proposal to provide money to hire teachers, firefighters and other state workers, invest in roads and bridges, and give tax breaks to companies that make new hires. It would also continue a payroll tax break that is set to expire at the end of 2011.

The White House signaled that the president is open to discussing the millionaires tax idea.

“The president’s goal is to grow the economy, put more money in the pockets of the middle class and put more Americans back to work, including teachers, construction workers and veterans,” said White House communications director Dan Pfeiffer. “As we have said from the beginning, we offered a balanced way to pay for the American Jobs Act, but if Congress has a better idea that ensures that everyone pays their fair share, we’re open to it.”

 


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