Obama 'Comfortable' With Senate's 'Millionaire's Tax'

President Obama held a press conference Thursday morning to announce he had reached an agreement with Senate Democrats on passage of his proposed jobs bill. The Senate will vote next week on a modified version of the bill. The bill will not be voted on in the Republican-led House.

“People need help right now,” Obama said, as he urged quick passage of the bill.

The bill would extend unemployment benefits, extend the payroll tax cut, offer tax benefits to companies that hire veterans, increase funding for constructing roads, bridges and schools, and give financial assistance to state and local governments.

An issue in the bill for Senate Democrats was how Obama proposed to pay for the additional funding.

Obama wanted to let tax cuts for the top two income brackets (families making more than about $250,000) to expire, eliminate some tax deductions for high wage earners, and impose a “Buffet rule,” or minimum tax rate for millionaires so that they would not pay a lower rate than middle income earners. He also wanted the Joint Select Committee on Deficit Reduction, tasked with reducing budget deficits by at least $1.2 trillion over 10 years, to come up with additional spending cuts to pay for his jobs bill.

Some Senate Democrats apparently balked at the idea of increasing taxes on families making more than $250,000 per year. In some high-income areas of the country, such as San Francisco or New York, $250,000 per year would be considered a middle-class income.

After his jobs bill proposal, Obama continued to say that his proposal would cut taxes for the middle class and increase taxes on “millionaires and billionaires.”

As an alternative, Senate Majority Leader Harry Reid proposed increasing taxes on those who actually make at least $1 million, rather than families making $250,000. On Tuesday he proposed a 5 percent surtax on income above $1 million.

In Reid's proposal, the tax would go into effect in 2012. Obama, however, had been touting the fact that tax increases would not go into effect until 2013, and he has said taxes should not be raised in a recession.

On Thursday, Obama and Reid came to a compromise on the two proposals. The millionaire's tax will be increased to 5.6 percent and not go into effect until 2013.

The jobs bill will be “fully paid for,” Obama said, “by asking millionaires and billionaires to pay their fair share.

“Some see this as class warfare. I see it as a simple choice. We can either keep taxes exactly as they are for millionaires and billionaires, with loopholes that lead them to have lower tax rates in some cases than plumbers and teachers, or we can put teachers and construction workers and veterans back on the job.”

With the Senate changes, however, no deductions, or “loopholes,” will be eliminated.

Since the jobs bill will not be passed by the House, some have said Obama is campaigning for his re-election rather than trying to put a bill together that can actually pass.

A reporter from The Associated Press asked, “Wouldn't it be more productive to work with Republicans on a plan that you know could pass Congress, as opposed to going around the country, talking about your bill and singling out, calling out Republicans by name?”

“I think it's fair to say that I've gone out of my way in every instance, sometimes at my own political peril and at the frustration of Democrats, to work with Republicans, to find common ground, to move this country forward,” Obama replied.

When asked if he is OK with the changes made by the Senate, Obama said, “We've always said we would be open to a variety of ways to pay for it.

“The approach the Senate is taking, I'm comfortable with, in order to deal with the jobs bill. We're still going to need to reform this tax code to make sure that we're closing loopholes, closing special interest tax breaks, making sure … that millionaires and billionaires aren't paying lower taxes than ordinary families.”