Obama will unveil his proposal Monday as a means of advancing the ball in the budget battle at the same time the U.S. presidential campaign is gaining momentum.
Unnamed administration officials told The New York Times Obama will propose having taxpayers who make more than $1 million a year pay the same percentage on their earnings as the middle class. In return, Democrats would get behind future cuts in Medicare and Medicaid.
The newspaper Sunday said Obama's plan would rally around recent public comments by investment mogul Warren Buffet, who said the wealthy had been "coddled" by Congress and been able to take advantage of tax rates on investments that are lower than income-tax rates the middle class is more likely to pay.
There are indications already that the Republicans will oppose the plan because of their entrenched opposition to any kind of tax increase. House Speaker John Boehner said last week that while the GOP was open to discussions on tax reform when a bipartisan commission on budget reduction gets to work later this fall, "Tax increases, however, are not a viable option for the joint committee."
A prominent Republican economist took issue with Buffet's opinion. N. Gregory Mankiw of Harvard said most millionaires actually live off their income, which is taxed at 35 percent, rather than investments.
Other analysts doubted raising taxes on the rich would have much of an impact. "The big money is in the middle-class subsidies," Leonard Burman, former director of the nonpartisan Tax Policy Center, told the Washington Post. "You're not going to balance the budget by eliminating ethanol credits. You have to go after things that really matter to a lot of people."