Schumer millionaire tax idea gains support

It took a year, but last week U.S. Senate Democrats and the White House finally began to accept an idea that Sen. Charles Schumer said first came to him on Long Island: target only millionaires for new tax revenue.

"It's time for millionaires and billionaires to pay their fair share of taxes," Senate Majority Leader Harry Reid (D-Nev.) said last week as he unveiled Democrats' new talking point.

On Wednesday, Reid and Schumer (D-N.Y.) proposed paying for President Barack Obama's American Jobs Bill with a 5.6 percent surcharge on incomes over $1 million. Obama said Thursday he was "comfortable" with the tax to fund the $447 billion measure.

For Obama and some key Democrats, the new proposal is a shift -- and a victory for Schumer, who is in charge of political strategy for Senate Democrats.

In the hunt for new revenues since his first federal budget in 2009, Obama has repeatedly talked about letting the Bush tax cuts expire for the wealthy. But Obama defines wealthy as households earning $250,000 a year or more and individuals making $200,000 or more.

Obama still supports those thresholds for the Bush tax cuts, his spokesman said Friday, but accepts the millionaires' tax to pay for his jobs bill.

The $200,000 threshold for a tax increase has long been a sticking point on Long Island. Rep. Steve Israel (D-Dix Hills), for instance, broke with Obama on the issue because of the area's high cost of living.

Schumer first floated the idea of raising taxes only on $1 million-plus incomes in an interview with Newsday a year ago and last week he said he hit on the idea after visiting Long Island.

"Anyone who has any experience on Long Island knows individuals making $200,000 and couples making $250,000 are hardly rich," he said, citing as examples the cost of buying a house, and high property taxes.

Though the IRS and the census don't publish data for either the $250,000 or $1 million income levels, estimates suggested fewer Long Islanders would face higher taxes under a millionaire's tax. About 100,000 Long Island households -- 58,000 in Nassau and 43,000 in Suffolk -- made more than $200,000 in 2009, the census estimates.

But only 18,000 taxpayers -- 12,000 in Nassau and 6,200 in Suffolk -- made $500,000 or more in 2008, the state found.

About 230,000 taxpayers nationally reported incomes of $1 million or more in 2009, the IRS said.

Asked about the millionaires he represents, Schumer said, "The more thoughtful people who make above $1 million say, 'Look, I'm doing great. I can afford a little more.' "

Schumer has had a hard time winning over Obama and some colleagues to his idea.

Last December, Schumer urged Obama to adopt the $1 million income level for expiration of the Bush tax cuts, but the president declined. He then filed an amendment to allow the Bush tax cuts to expire for incomes over $1 million only -- 53 Democrats voted for it but four voted no. It fell short of the 60 votes needed to end a filibuster blocking passage.

Schumer detected a shift last month when Obama endorsed the "Buffett Rule," named for billionaire investor Warren Buffett, who said the rich shouldn't pay a lower tax rate than the middle class.

That led to the Democrats' millionaires' tax to pay for the jobs bill, Schumer said.

But it's unlikely the jobs bill and its new tax will pass in the Senate this week, he acknowledged. Senate Minority Leader Mitch McConnell (R-Ky.) dismissed the surcharge as "political rhetoric."

Still, Schumer cited polls he said that show the popularity of the idea.

Raising taxes on millionaires won support from 64 percent of Americans in an Oct. 3 CBS News poll.While many Republicans in Congress hold a different view, Schumer said he hopes the Republican grassroots will change it.

"We have to influence the public," Schumer said, "and they'll influence the congressmen and senators."