The Republican Plan B proposal for averting the year-end fiscal cliff would let taxes rise for about 25 million middle-class households and most major businesses while preserving tax cuts for millionaires worth an average of $50,000 a year, according to a White House analysis distributed Wednesday.
The measure, proposed by House Speaker John Boehner (R-Ohio), would permit the top income rates to rise from the current 35 percent to 39.6 percent on household income over $1 million and would raise the tax on capital gains and dividends from 15 percent to 20 percent. But it would not restore limits on deductions and exemptions that were wiped out during the George W. Bush administration, the analysis shows.
The bill would keep rates at 35 percent on income below $1 million, even for millionaires. And it would not extend an array of major tax breaks – including those for college tuition, the working poor and research and development – that either have already expired or are scheduled to do so in January.
The White House argues that Plan B also would do little reduce record budget deficits. The measure would generate only enough new revenue to reduce deficits by about $300 billion over the next decade, by White House estimates – less than half the income to be gained from a Senate-passed bill that would let all the Bush tax cuts expire on income over $250,000 a year. President Obama’s latest proposal to raise taxes on income over $400,000 a year would generate about $600 billion in fresh revenue, according to senior administration officials.
Much of the revenue lost, compared with the Senate bill, would go to millionaires, the analysis shows: Taxpayers earning between $500,000 and $1 million would reap about 25 percent of the benefits, and nearly 70 percent of the benefits would flow to those earning more than $1 million a year.
Senior administration officials argued Wednesday that the measure is unlikely to pass the House in a vote scheduled for Thursday, much less win approval of the Democratic-controlled Senate. If it did, White House spokesman Dan Pfeiffer said Wednesday morning, the president would veto it.
“The Congressional Republican 'Plan B' legislation continues large tax cuts for the very wealthiest individuals -- on average, millionaires would see a tax break of $50,000 -- while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on and ending critical incentives for our nation’s businesses,” Pfeiffer said in a statement. “It would also cut off a vital lifeline of unemployment assistance to 2 million Americans fighting to find a job just a few days after Christmas, while deeply cutting Medicare.”
Senior Republican aides dismissed the White House analysis.
“The White House’s opposition to a back-up plan to ensure taxes don’t rise on American families is growing more bizarre and irrational by the day,” Brendan Buck, a spokesman for Boehner, said in a statement. “Republicans have always said a broader, ‘balanced’ plan is the ideal solution, and we have put one forward.”