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U.S. activist Norquist blesses Boehner's tax plan, conservative group rejects it

By Thomas Ferraro and Rachelle Younglai

WASHINGTON (Reuters) - Leading U.S. anti-tax activist Grover Norquist gave his blessing on Wednesday to House Speaker John Boehner's plan to avert the "fiscal cliff," concluding that despite complaints to the contrary, it would adhere to Republican lawmakers' pledges not to raise taxes.

But more than a dozen other conservative figures and groups, including the Tea Party Express and the Heritage Foundation, disagreed.

They urged lawmakers to oppose the plan when it comes up for a vote on Thursday in the House of Representatives.

Some even warned that legislators who back Boehner's plan, risk being voted out of office in 2014.

Technically, Boehner's proposal, which has been dubbed "Plan B," does not include a tax increase. What it does is prevent any tax hikes on annual incomes of up to $1 million, thus permitting tax increases on higher incomes.

That seemed to be enough of a distinction for Norquist's Americans for Tax Reform to say the plan does not violate its anti-tax pledge.

"Having finally seen actual legislation in writing, ATR is now able to make its determination," Norquist's group said in a one-page statement. "ATR will not consider a vote for this measure a violation of the Taxpayer Protection Pledge."

The Club for Growth read the bill differently.

"On the substance, this bill is anti-growth," said Andy Roth, the group's vice president for government affairs.

"It increases tax rates for those making over $1 million while also raising taxes on capital gains and dividends," Roth said. "We don't buy into the Washington-speak, suggesting that these are actually tax cuts."

Brent Bozell, president of ForAmerica, a conservative advocacy group, said: "Fiscal conservatives will not stand for this. If Republicans support the tax increase, they will lose control of the House in 2014."

The conflicting conservative assessments will complicate efforts by Boehner to defy a White House veto threat and get his plan through the House and to the Senate for consideration.

House Republican leaders have voiced confidence that their chamber will sign off on Boehner's plan, cranking up pressure on Obama and fellow Democrats in the Senate to make concessions.

But Democrats have denounced the plan, portraying it as a misguided distraction from on-again, off-again talks between the president and the speaker.

Boehner's "Plan B" would shield more than 99 percent of Americans from a tax hike. But it would let tax rates automatically rise on annual incomes of more than $1 million, as scheduled, on January 1.

Obama has proposed a threshold of $400,000 a year in income, up from an earlier $250,000. Any tax increase would be part of a long-sought deal to reduce the U.S. budget deficit.

Unless the White House and Congress reach agreement by the end of the month, a crush of tax hikes and spending cuts are set to take effect, threatening to push the United States over the so-called "fiscal cliff" and back into a recession.

Boehner and fellow Republicans had long demanded that all tax cuts signed into law by Republican President George W. Bush be extended before they expire next month.

But Boehner caved, noting that Obama had won re-election last month promising to raise taxes on the wealthy and thus had the upper hand.

Norquist began circulating his anti-tax pledge to members of Congress in 1986. Over the years, it has been signed by most Republican, helping block countless efforts by Democrats to raise taxes and expand government.

The assessment of Boehner's plan by Norquist's group was quickly circulated by the speaker's office.

"This legislation ... permanently prevents a tax increase on families making less than $1 million per year," ATR said in its analysis.

"Republicans supporting this bill are this week affirming to their constituents in writing that this bill — the sole purpose of which is to prevent tax increases — is consistent with the pledge they made to them," ATR said.

Roth denounced the bill, however, and said lawmakers' votes on it would be used in his group's annual "scorecard" of members of Congress.

Representative Tim Huelskamp, a Kansas Republican, said he would vote against the bill but declined to predict how many of his colleagues would oppose it. Republicans recently stripped Huelskamp of a committee assignment amid complaints he was uncooperative.

(Editing by Sandra Maler and Christopher Wilson)

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