Senate Democrats Propose 5% Surtax on Millionaires

By COREY BOLES, The Wall Street Journal

WASHINGTON—Senate Democrats proposed a 5% surtax on people earning more than $1 million a year to pay for the $447 billion cost of President Barack Obama’s job-creation bill, in a move designed to shore up their party’s support for the measure.

The proposal would replace the range of tax deductions for wealthy people, oil companies and other businesses that the president had proposed to end to offset the cost of the job-creation initiatives in his plan.

Democratic leaders said they hoped to bring the revised plan to the Senate floor next week for debate. But assuming they keep all of their votes, they would need at least seven Republicans to vote in favor of any effort just to start debate on the legislation.

It’s also not clear that the changes would win over all the Democrats who have been opposed to the package. Sen. Joe Manchin (D., W.V.) has voiced objections to the spending portion of the bill, so changing how it is paid for would be unlikely to sway him. Sen. Ben Nelson (D., Neb.) has repeatedly said he would oppose any tax increases given the current economic malaise.

Sen. Charles Schumer (D., N.Y.) said the surtax would impact any income earned by people above $1 million annually. It would also impact dividends and capital gains, he said. The New York Democrat initially said it would be in place for 10 years, but an aide to the lawmaker later said the measure would be implemented permanently. If agreed to, the surtax would take effect from Jan. 1, 2012, the aide said.

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