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Obama 'fiscal cliff' proposal now puts tax raise on $400K earners

President Obama is seen greeting a man in this undated file photo.

December 18, 2012 12:00:00 AM PST
President Barack Obama now wants to raise the top tax rate on those earning over $400,000 a year, in a concession that is a major step in avoiding the so-called "fiscal cliff."

Mr. Obama previously wanted to raise rates on those making more than $200,000 a year. Republican House Speaker John Boehner wants to tax those earning over $1 million year.

However, there were reports Tuesday that Boenher is working on a 'Plan B' proposal.

"We have to stop whatever tax rate increases we can," Boehner said in a meeting with House GOP members, according to prepared remarks released by an aide. "In the absence of an alternative, as of this morning, a 'modified Plan B' is the plan."

Unless Congress acts, a tax rate increase will take effect Jan. 1 on all income earners. Boehner first opposed raising rates on any income earners, including the wealthiest Americans, but agreed on Friday to accept an increase in tax rates for taxpayers who earn more than $1 million.

Boehner's plan would raise about $1 trillion in taxes over 10 years.

The Associated Press contributed to this report.