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Both Sides Tout Millionaire Tax

Both parties claimed Wednesday that a $52 billion “millionaire tax” to pay for GI education benefits could be electoral red meat for their side in this year’s elections, although it also could cause a touch of heartburn for some Members.

Republicans said it will be easier for their members to vote against the package of GI and unemployment benefits included in the nearly $250 billion war supplemental Thursday because they can attack it as a tax increase on small businesses.

They also contend that they have a new campaign weapon to use against Blue Dogs, who demanded the offset and mostly represent conservative-leaning districts.

Most people making more than $500,000 a year, or $1 million a year for couples, have small businesses, Republicans argued.

“At a time when our economy is struggling, it seems more than counterproductive to increase the tax burden faced by the backbone of our economy: small businesses,” said Antonia Ferrier, spokeswoman for House Minority Whip Roy Blunt (R-Mo.). “The problem is that this Democratic majority isn’t capable or, worse, isn’t willing to cut spending.”

But Democrats argued that they can tar vulnerable Republicans who oppose the tax increase as favoring millionaires over veterans returning from Iraq.

“They want to borrow more money from the Chinese to provide an opportunity for an education to those who are fighting in Iraq,” Democratic Congressional Campaign Committee Chairman Chris Van Hollen (Md.) said. “We think it’s the responsibility of those who have benefited the most from the opportunities that this country offers.”

Van Hollen said the “very simple” message — dubbed the “patriot premium” — would resonate with voters.

But Chief Deputy Minority Whip Eric Cantor (R-Va.) called the proposal “predictable class warfare on the part of the Democrats” that would harm the economy.

“This is a small-business job killer. The people of America will not be fooled,” Cantor said.

He said such taxes “ultimately make their way down to the average American,” and what Americans are looking for is “a real plan of how we can restore job growth in this country.”

House Republican Conference Chairman Adam Putnam (Fla.) also expressed incredulity that the Democrats “yet again … have publicly gone on record with their determination to raise taxes.”

Rep. Allen Boyd (D-Fla.), co-chairman of the Blue Dogs, defended the move.

“All I know is I’m very proud of the Blue Dogs for sticking to their principles,” he said, pointing to the need to help returning soldiers with education expenses. “A lot of them are hurt and can’t go back to the jobs they had before.”

The Blue Dogs had held up the supplemental, telling Democratic leaders they could not support the GI benefits unless it was paid for. Blue Dogs pitched the millionaire tax, and leadership accepted it Tuesday night.

“If you are going to create it, be willing to pay for it. It’s simple economics,” Boyd said.

But not all Blue Dogs have committed to voting for the supplemental, despite the inclusion of the tax increase.

Rep. Jim Cooper (D-Tenn.) expressed concern that the tax increase could get killed the minute it heads to the Senate. He said he would have preferred a cut in spending.

“Really, the question is, how long does the fig leaf stick on?” he said.

Some Democrats appeared miffed that leadership inserted the provision into the bill at the last minute.

“I have been concerned about these things, and I do think the process is better served by holding hearings and going through committee,” said Rep. Richard Neal (D-Mass.), who heads the House Ways and Means Subcommittee on Select Revenue Measures. Neal said he wasn’t consulted on the move. “I haven’t even looked at it, to tell you the truth.”

Rep. Artur Davis (D-Ala.) hadn’t heard about the tax increase Wednesday, but he said he would likely back it to support the GI bill. But Davis said he would have preferred closing corporate loopholes, including a change to carried interest taxes.

Even if the tax increase were to somehow miraculously to survive the Senate — where it is expected to die — President Bush’s budget director, Jim Nussle, issued a fresh veto threat Wednesday.

“Raising taxes at a time when we have seen challenges to our economy is not the right way to approach this,” Nussle said in a C-SPAN interview, adding that the GI bill was “very expensive” and arguing that the administration supported a cheaper version.

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