Dems pitch controversial plan to tax Wall Street, to pay for new middle-class credit

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Influential Democrats are pushing a new plan to give middle-class Americans a big tax break, but only by imposing a new tax on Wall Street traders and other top earners -- drawing a rebuke from majority Republicans who say the proposal would hurt the economy.

"Our economy is still struggling to create jobs -- and the last thing we need is a new trillion-dollar tax hike added to the current broken tax code," said Michael Steel, spokesman for House Speaker John Boehner.

Rep. Chris Van Hollen, D-Md., unveiled the tax plan on Monday at the Center for American Progress.

His plan would give a tax credit of roughly $2,000 per year to middle-class families, reportedly defined as couples making under $200,000. According to The Washington Post, the windfall would add up to roughly $1.2 trillion over the next decade.

However, to pay for the plan, Van Hollen wants to charge a fee on financial transactions, and curtail tax breaks for other top earners, effectively transferring wealth from Wall Street and beyond to everyone else.

Van Hollen on Monday said middle-class families need to keep more of what they earn, calling for a "fair" tax code that rewards work, and not just those who make money from making money -- a dig at Wall Street.

House Republicans urged Democrats to work with them on reforming the tax code to eliminate loopholes and bring down rates overall. But they said Van Hollen's plan is not the right approach.

"Just as the sun rises in the east, Washington Democrats propose another massive tax increase," said Brendan Buck, spokesman for House Ways and Means Committee Chairman Paul Ryan, R-Wis. "Here in the House our focus is going to be on cleaning up the tax code so that we can lower rates for all taxpayers and help create good-paying jobs, not scaring them off with punitive tax hikes."

The plan stands little chance of advancing, given that Republicans have a tighter grip on the House and have taken control of the Senate, in the wake of the November midterms.

But it immediately puts congressional Republicans and Democrats at odds, once again, over the tricky topic of taxes and tax reform, which some hoped might be a priority in the new Republican-controlled Congress.

The House Democrats' plan is more aggressive than anything touted by the Obama administration last year.

The Democratic Congressional Campaign Committee fired back at Boehner on Monday, saying in a statement, "Apparently House Republicans only like tax relief if it's for their millionaire friends and special interest backers, not for hardworking middle class families."

Van Hollen's office argues that the plan aims to grow paychecks for everyone, "not just the wealth of a few." They stress it is fully paid for.

The Washington Post first reported that the plan would give a credit of $1,000 to individuals and $2,000 to couples making under the wage cap. It would also increase the tax credit for child care and make a few other changes.

Democrats reportedly would fund this with a .1 percent fee on stock trades; limits on tax breaks for the top 1 percent; and new rules for deductions for high-value executive performance bonuses.

Fox News' Chad Pergram contributed to this report.