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Liberals Balk at Nancy Pelosi Tax Proposal

A coalition of liberal interest groups is pushing back on a proposal by House Minority Leader Nancy Pelosi (D-Calif.) to extend the Bush tax cuts for individuals earning less than $1 million a year, instead pushing a proposal from President Barack Obama that would draw the line at $250,000 a year in income.

Pelosi said in a letter to Speaker John Boehner (R-Ohio) on Wednesday that he should bring up a vote on extending tax cuts for individuals earning less than $1 million a year “as early as next week,” when the House returns from recess.

Americans for Tax Fairness, a coalition of nearly 30 liberal organizations including the AFL-CIO, the Center for American Progress and Citizens for Tax Justice, announced it was launching today and in its inaugural press release criticized “proposals on the table to end the Bush tax cuts for those making $1 million a year.”

Frank Clemente, manager of the coalition, said that the new group “very much appreciates the president’s strong position on this” and that “we just can’t afford” the revenue that would be lost by drawing the line at $1 million.

Clemente noted that the coalition had been in the works for two months and deferred to Pelosi’s knowledge of the legislative process.

White House spokeswoman Amy Brundage said: “The president has been clear that Congress must extend the tax rates for all families making less than $250,000 a year and let the rates for the very wealthiest expire at the end of the year. The question now is whether Republicans in Congress will vote to give millions of middle-class families the confidence that they won’t see their taxes go up at the end of the year, or whether they will continue to hold the middle class hostage so they can extend big tax cuts for the very wealthiest Americans that our nation can’t afford.”

A Democratic leadership staffer pointed out that Pelosi has long-used the $1 million line in rhetoric and suggested the move is as much about forcing Republicans to adopt an extreme position as it was a negotiating position.

Drawing the line at $1 million “will clearly demonstrate whether Republicans stand with millionaires or the middle class,” the source said.

But the letter clearly rankled some liberals. For instance, Citizens for Tax Justice released a preliminary study late Wednesday slamming the proposal, saying it would raise 43 percent less revenue than Obama’s plan and that 50 percent of the tax cuts in Pelosi’s plan would go to millionaires.

Pelosi’s letter also struck a different tone from Senate Majority Leader Harry Reid, who on Tuesday, in a terse letter to 41 Senate Republicans, had dismissed the possibility of a deal on the issue before the November elections.

The Nevada Democrat was responding to a letter signed by those 41 Senate Republicans that demanded immediate action on extending Bush-era tax cuts that expire at the end of this year.

In his letter, Reid suggested the GOP Senators’ concerns were not legitimate unless they agreed to compromise on a deficit reduction package that includes tax increases on the wealthy and corporations.

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