Senate Dems target millionaires for tax in draft budget outline

Millionaires would be hit with a 3 percent surtax under a draft Senate Democratic budget.

A Senate aide told The Hill on Wednesday that the draft 2012 budget proposal presented at Tuesday’s Democratic policy lunch called for a 3 percent surtax on income above $1 million a year. 

{mosads}Senate Budget Committee Chairman Kent Conrad’s (D-N.D.) proposal has been described as a 50-50 split of spending cuts and tax increases to reduce the deficit, which was a nod to liberals in the Senate Democratic Caucus.

Conrad said in a statement Wednesday that he had shared various draft proposals with colleagues over the past two weeks, and that the budget would continue to evolve as he talks with his fellow senators.

“While I am not prepared to comment on specifics, I can tell you that the draft plans I have shared with colleagues all have about $4 trillion of deficit reduction over the next 10 years,” he said. “They are balanced plans that achieve savings in a fair and responsible manner, and put the country on a sound long-term fiscal course.”

The shift to the political left is also sure to play a role as Democrats lay down a marker in discussions over raising the $14.3 trillion debt ceiling with Republicans, who have said the House GOP budget is their starting point. With the Senate Budget Committee narrowly divided – 12 members from the Democratic caucus, 11 Republicans – Conrad looks likely to need the full support of his party to move a proposal to the floor.

Still, it remains to be seen whether a surtax remains in the Senate proposal, as it could have trouble winning support among the more centrist Democrats in the chamber. 

Sen. Mark Begich (D-Alaska) said Democrats were weighing their options, but noted they had yet to see a final version of Conrad’s proposal.

“I think it’s going to be a hard issue,” said Begich, a member of the Senate Budget Committee. “I think if we just expire out the tax cut for people who make a million dollars or more, that would get broad support.”

For their part, Republican leaders in both the House and the Senate have said that tax increases are off the table in the talks over deficit reduction, as Washington officials have coalesced around a target of lopping at least $4 trillion off the deficit over a decade.

In general, more Democrats have referenced taxing annual income above $1 million of late, with Sen. Charles Schumer (D-N.Y.) having pushed it during the debate over the Bush tax cuts late last year. 

House Minority Leader Nancy Pelosi (D-Calif.) floated increasing rates on income above that level in April, while a group of House Democrats has released a measure that would establish incrementally higher tax rates for income above $1 million.

Sen. Bernie Sanders (I-Vt.), one of the more liberal members of the Democratic Conference, introduced legislation earlier this year that would place a 5.4 percent surtax on annual income of more than $1 million. Sanders said that policy would raise up to $50 billion a year in new revenues for the United States.

As Conrad told reporters last week, the Budget Committee can tell the Senate Finance Committee how much revenue to raise with its budget, but not necessarily how to raise it. 

Sen. Sheldon Whitehouse (D-R.I.), also a Budget Committee member, said Wednesday that a surtax could be built into the budget’s assumptions to justify the revenue increases it contains. The House GOP budget, largely crafted by Rep. Paul Ryan (R-Wis.), also had some specific revenue proposals.

Conrad had hoped to move his budget to a markup this week, but has been hampered by President Obama’s scheduled meetings with senators on Wednesday and Thursday.

Sen. Jeff Sessions (R-Ala.), the ranking member on the Senate Budget Committee, has sharply criticized Democrats in his chamber for not releasing a budget. Congress was supposed to complete its budget resolution by April 15.

Speaking on the Senate floor on Wednesday, Sessions said that Democrats had not moved forward “because the big spenders in their caucus cannot support a plan that would actually get the job done and put us on a sound financial path, and they can’t produce a plan that will withstand public scrutiny.”

Senate Budget Republicans have also called for the Democratic proposal to be released at least three days before it is marked up.

Alexander Bolton contributed to this report.

This story was originally published at 1:36 p.m. and updated at 8:08 p.m.