Nancy Pelosi supports plan to raise taxes on incomes over $1 million

Predicting the next big budget battle will center on taxes on the wealthy, House Minority Leader Nancy Pelosi (D-Calif.) floated a plan Thursday to raise rates only on incomes above $1 million a year.

The offer came just one day after President Obama endorsed a broader revenue-raising strategy that would hike taxes on those earning more than $250,000 annually, beginning in 2013.

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By scaling back the threshold to $1 million, Pelosi — who has supported the $250,000 threshold in the past — is acknowledging the political realities of a Congress half-controlled by Republicans who oppose any tax hikes at all.

Congress is poised to tackle tax reform this year, and polls consistently indicate that voters favor raising taxes on the wealthiest Americans as a way to rein in soaring deficit spending.

“I’d like to know what [Republicans] think about $1 million,” Pelosi told reporters Thursday at the Capitol. “If you make — not have — $1 million a year, should you not participate in the sense of community of our country?

“I’m willing to put that on the table,” she said.

In December, Obama approved legislation extending Bush-era tax rates for all income levels after Republicans threatened to kill the bill if upper-income brackets were excluded. Those cuts expire at the end of 2012. 

A Senate amendment to limit the benefit to those earning less than $200,000 — and another setting the threshold at $1 million — both failed to get the 60 votes required to defeat GOP filibusters.

Many Democrats were angry with Obama, who promised to roll back the cuts, for agreeing to extend the Bush-era tax rates for the wealthy. 

In a major address laying out his deficit-reduction strategy, Obama on Wednesday vowed not to renew the tax-cut extensions on the upper-income earners when they expire.

“In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans,” he said at George Washington University. “But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again.”

The issue has already surfaced in Congress this year. Earlier this month, Democrats on the House Budget Committee proposed to amend the GOP’s 2012 budget proposal by hiking taxes on those earning more than $1 million. All the panel Republicans and Rep. Heath Shuler (D-N.C.) united to kill the measure.

Sen. Charles Schumer (D-N.Y.) sponsored the amendment setting the threshold at $1 million. His office said Democrats believe rolling back the Bush tax cuts for people with income above $1 million would raise $30 billion per year. This is based on December estimates Democrats received from the Joint Committee on Taxation.

Tax Foundation President Scott Hodge said his group didn’t have an estimate, and added that expected revenues generally don’t bring in as much money as is anticipated. 

Bernie Becker contributed to this report.

This story was originally posted at 2:43 p.m. and updated at 7:15 p.m.