Harry Reid sees millionaire tax as way to pay for jobs bill

By Karoun Demirjian

Wednesday, Oct. 5, 2011 | 5:01 p.m.

Senate Majority Leader Harry Reid has a plan to pay for the Obama jobs bill: a millionaire’s tax.

It’s a marriage of two Democratic policies that are equally unpopular with the GOP -- but politics aside, the math works.

President Barack Obama’s jobs plan would cost the federal government about $450 billion dollars, almost exactly how much raising the tax burden on millionaires is expected to draw in: $445 billion dollars.

“More than 50 percent of the Tea Party and 75 percent of other people in America agree that we have to do something about this,” Reid said at a news conference with other Democratic leaders today. “The problem is that none of them are in the Senate.”

Reid’s plan is slightly different than other changes to the top end of the tax structure Democrats have advocated in the last year. Earlier, Democrats were arguing for simple eliminating the tax cuts of 2001 and 2003 on those making $250,000 or more.

This plan, however, is a clean 5 percent hike on millionaires — percent more than whatever rate they have been paying, so a 35 percent tax rate becomes a 40 percent tax rate, and so on.

“Drawing the line at a million dollars is the right thing to do,” said Sen. Charles Schumer of New York. “It is hard to ask more of households that make $250,000 or $300,000 a year; many of them 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. It also would affect too many small businesses if you drew the line at $250,000.”

If that argument sounds familiar, it should: it was exactly the reason why Republicans were arguing against the Democrats’ then-$250,000 floor for tax increases last year.

But Republicans have shifted their focus too: now, they’re taking aim at Obama’s jobs proposal.

This week, the Senate began working and voting on a bill to punish China for manipulating its currency, an item Reid has echoed the AFL-CIO in calling the “single most important job-supporting trade measure” before Congress.

Reid puts the China currency bill top on a list of items that comprise the Democrats’ jobs agenda for this session of Congress. Later this month they'll work on the president’s jobs bill.

But Republican leaders charge that the China currency legislation is little more than inciting a trade war, and that Democrats are simply trying to score easy political points with a few slams of China before moving into the much more treacherous political territory of the Obama jobs plan.

Even Reid admitted he doesn’t expect to get all Democrats on board.

“I don’t know what unanimity means,” he said somewhat rhetorically when asked if there would be unanimous support among Senate Democrats. “We’ll get most all the Democrats.”

But Democrats admitted to the bill’s powerful political message even as they countered Republican accusations that politics were at play.

“It sort of looks almost like a subterfuge to block a China bill, which is very hard to oppose directly, because it is so needed substantively and so popular politically,” Schumer said.