Obama proposes tax hikes on wealthy to pay for $447B jobs bill

The White House said Monday that President Obama wants to pay for his $447 billion jobs bill by raising taxes on the wealthy and businesses.

Jack Lew, director of the Office of Management and Budget (OMB), said the tax hikes would pay for Obama’s entire bill, which the administration is sending to Congress Monday evening.

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The chief provision announced by Lew would be to limit itemized deductions for individuals who make more than $200,000 a year and families that make more than $250,000, something the Obama administration has previously pushed to do through its budget proposals. Lew told reporters at the White House press briefing that this would raise about $400 billion.

The administration would tax the income investment fund managers make, known as “carried interest,” as regular income instead of as capital gains, which has a low 15 percent tax rate. This is another longstanding administration goal that has been resisted by Wall Street as well as some Democrats.

The administration estimates the capital gains change would provide $18 billion in revenue.

The administration also wants to eliminate tax breaks for the oil-and-gas sector, which would raise $40 billion, the administration said.


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Another $3 billion would come from changing the way corporate jets depreciate. With a few other revenue increases, Lew indicated the total measures proposed by the administration would bring in $467 billion, $20 billion more than the cost of the bill.

Obama is expected next Monday to formally unveil his recommendations to the supercommittee created by the debt-ceiling deal. That panel of 12 lawmakers is charged with cutting $1.5 trillion from the 10-year budget.

Obama will challenge them to “overachieve” and cut more from the deficit, including enough to pay for the jobs bill, if necessary, according to White House press secretary Jay Carney.

“The president is asking Congress to make choices,” Carney said.

Lew and Carney said that Obama is hopeful that the supercommittee will overshoot its goal of cutting the deficit by $1.5 trillion, but the president is sending Congress a bill that is paid for now because of the urgency to get the economy moving.

“It can't wait until Thanksgiving and it can't wait until Christmas,” Lew said.

Republicans pointed out that the proposal on itemized deductions had run into resistance even during the last Congress, when Democrats held large majorities in both chambers.

“It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past," Michael Steel, a spokesman for House Speaker John Boehner (R-Ohio), said in a statement. "We remain eager to work together on ways to support job growth, but this proposal doesn’t appear to have been offered in that bipartisan spirit."

The White House dug in on its refusal to say how many jobs the package would create, pointing instead to an estimate from Moody’s that said the bill would create about 1.9 million jobs.

Lew noted that he was not a part of Obama’s economic team when National Economic Council director Christina Romer and Vice President Biden's former chief economist Jared Bernstein said that the original stimulus package would reduce unemployment to below 8 percent.

After months of being reminded by Republicans that the recovery act did not cut unemployment, which is now at about 9 percent, Lew said he thinks it is “dangerous to ever predict unemployment rates.”

This story was posted at 1:23 p.m. and updated at 2:16 p.m.