Deal pushes 'millionaire's surtax' plan back to 2013

Story highlights

  • Sources: Senators, White House iron out 'millionaire's surtax' deal
  • Under Democrats' plan, surtax would take effect in 2013, not 2012
  • Agreement also raises proposed rate to 5.6% from 5%, sources say
  • Pushing it back robs GOP of election year ammunition, sources say
The White House and Senate Democrats have agreed to push the effective date of a proposed "millionaire's surtax" back a year to January 2013 and to slightly raise the rate, White House and congressional sources told CNN on Wednesday.
A 5% surtax on Americans earning $1 million or more per year -- proposed by Senate Majority Leader Harry Reid, D-Nevada, as a means of funding President Barack Obama's $447 billion jobs bill -- had been planned to take effect in January 2012. Under the new agreement, the surtax would be 5.6%, a Senate Democratic leadership aide told CNN.
"It satisfied our caucus' desire to for this surtax on millionaires to pay for (the jobs plan) and is consistent with the president saying no tax increases in 2012," the aide said.
Senate Democratic aides told CNN that the timing of Reid's plan would give Republicans an election-year opening to argue that Obama wants to raise taxes while the economy is still very fragile.
The White House and congressional Democrats had hoped to present a unified front against Republicans, who they anticipate will oppose the surtax, and portray them as protecting the wealthy over creating jobs for the middle class, congressional sources told CNN.
Earlier Wednesday, White House Press Secretary Jay Carney signaled Obama was open to negotiation.
"The meat of this legislation, the president's proposal, are the provisions that put teachers back to work, put construction workers to work, cut taxes for working Americans, incentivize small businesses to grow and hire and increase their wages, and that will be voted on," Carney said. "How you pay for it, we've always said, was something we were open to negotiate and debate."
Earlier Wednesday, during a photo opportunity earlier Thursday with Honduran President ---- Lobo, Obama was asked three times by reporters whether he endorsed Reid's surtax. He didn't take the opportunity to do so.
The president had proposed raising taxes on individuals making $200,000 or more per year and couples making $250,000 or more, which would take effect in January 2013, two months after the next presidential election.