Obama frames tax breaks as key election issue

"We don't need more top-down economics. We have tried that theory. We have seen what happens," Obama said, in a White House speech.

The Democratic incumbent insisted the trillion-dollar tax breaks instituted during president George W. Bush's administration had "benefited the wealthiest Americans" more than others.

"That is why I believe that it is time to let the tax cuts for the wealthiest Americans -- folks like myself -- expire," he added.

"I'm not proposing anything radical here," he said, referring back to the situation under a previous Democratic president.

"I just believe that anybody making over $250,000 a year should go back to the income tax rates we were paying under Bill Clinton, back when the economy created nearly 23 million new jobs, and the biggest budget surplus in history."

With Bush-era tax cuts set to expire at the end of 2012, taxes will rise for virtually all US households if Congress does not pass new legislation.

In the 2012 campaign, Obama's strategy for boosting the economy differs sharply from that of Republican adversary Mitt Romney.

Taxes will play a crucial role in November, and Obama acknowledged as much.

"In many ways the fate of the tax cut for the wealthiest Americans will be decided by the outcome of the next election," he said.

"My opponent will fight to keep them in place, and I will fight to end them," Obama added, suggesting Democrats and Republicans should work together now to extend the tax cuts for some 98 percent of Americans.

Such a move would be unlikely in the Republican-controlled House unless it is part of broader legislation to extend all tax breaks, a move which the chamber is expected to press for this summer.

Republicans argue Congress should approve a full extension, and use 2013 as an opportunity to focus on comprehensive tax reform outside the furnace of election-year politics.

"Many members of the other party believe that prosperity comes from the top down, so that if we spend trillions more on tax cuts for the wealthiest Americans, that will somehow unleash jobs and economic growth," Obama said.

"I disagree."

Obama's tax pitch dovetails with his campaign's aggressive strategy to paint Romney, estimated to be personally worth around $250 million, as a secretive businessman who may not be paying his fair share of taxes.

Top Democrats have unleashed a coordinated attack on Romney's use of offshore tax havens, and demanded he release more tax returns in order to explain himself.

Obama advisor Robert Gibbs demanded: "Is somebody who has sheltered their income taxes in Switzerland, the Caymans and Bermuda really someone who's going to get under the hood and get us to a place of tax fairness?"

"The American people deserve to know if he's sheltering this money somewhere, or quite frankly is he not paying the taxes that he owes?"

The Romney camp branded the attacks "unseemly and disgusting" character assaults on a successful businessman.

Even before Obama's Monday speech, Republicans were assaulting his plan as a "massive tax hike" that would hurt small businesses and snuff out job growth.

"Unlike President Obama, governor Romney understands that the last thing we need to do in this economy is raise taxes on anyone," Romney campaign spokeswoman Andrea Saul said in a statement.

She said Romney "has a plan to permanently lower marginal rates, help middle-class Americans save and invest, and jumpstart economic growth and job creation."

Obama insists his proposal would extend tax cuts for 97 percent of small business owners, a move the president argued "is about helping job creators."

Should Obama stick with his $250,000 threshold, he may face resistance from his own Democrat supporters, some of whom are unsure about what marker to use for defining who is rich.

House Minority Leader Nancy Pelosi of California and Senator Chuck Schumer of New York, who hail from two of the wealthiest US states, support higher taxes for annual incomes above $1 million.