Senate Democrats: Tax the Rich to Cover Obama's Job Package

Senate Democrats announced Wednesday a proposal to add a tax surcharge on millionaires and billionaires to pay for President Barack Obama's roughly $450 billion jobs package.

A five percent tax on the nation's wealthiest is an alternative to provisions Obama suggested to cover the cost of his jobs plan.

Senate Majority Leader Harry Reid, D-Nev., said that the tax surcharge on the rich has broad support among voters and urged Republicans to pass the jobs package, though new taxes are anathema to the GOP in Congress.

The Republicans are going to have to make a decision. They can hang on to their mantra of 'no new taxes,' but I would suggest they are not keeping touch with their constituents, Reid said.

Obama's job plan is a mix of tax cuts and new spending aimed at increasing employment in a sagging economy.

The plan calls for a payroll tax cut, lowering middle class taxes and providing incentives to increase hiring among veterans and the long-term unemployed. Funds would also be used to prevent teacher layoffs, extend unemployment insurance and launch infrastructure and school building renovation projects.

Obama included provisions to pay for the entire package, like nixing tax breaks for oil and gas companies, taxing capital gains as regular income for hedge fund and private equity managers and limiting tax deductions for households making $250,000 a year.

However, these provisions would be unnecessary if a newly-created super-committee can increase its $1.5 trillion deficit reduction target, as Obama requested.

But Senate Democrats prefer their own proposal to pay for the jobs package.

It is hard to ask more of households who make $250- to $300,000 a year, said Sen. Chuck Schumer, D-N.Y. and the No. 3 Senate Democrat. But it is perfectly fair for those making a million a year or more -- many of them are billionaires who have done very well over the decade -- the top one percent of the group, to give back their tax break so we can invest in our country's future.

Sen. Minority Leader Mitch McConnell of Kentucky tried to get Senate Democrats, some of whom are not on board with the jobs program, to vote on the jobs package as an amendment to the China currency legislation.

Reid blocked McConnell's legislative maneuvering and called the move partisan games during the Wednesday press conference. The majority leader said he wants to move on the jobs package after finishing business with legislation addressing China's alleged efforts to undervalue its currency.

Meanwhile in the House of Representatives, Majority Leader Eric Cantor, R-Va., has said that Obama's plan is dead on arrival, preferring instead to break the bill up into smaller pieces.