Most House Democrats back President Barack Obama's plan to let tax cuts for the wealthy expire this year, though the proposal will face a battle in the Senate, the acting chief of the tax-writing panel in the House of Representatives said on Tuesday.

Tax cuts for all income groups enacted in 2001 and 2003, including for capital gains and dividends, will expire at the end of this year unless Congress acts to extend them.

Keeping a campaign pledge, Obama wants to extend the cuts for people who earn less than $200,000 and families that earn less than $250,000. But Obama and most Democrats want to let the cuts for the richer groups expire.

Republicans and a small number of conservative Democrats favor extending them all and the Democrats' slimmer majority in the Senate will make it a tougher fight in that body, Rep. Sander Levin, acting chairman of the Ways and Means Committee, told reporters.

We're ready to fight over the issue, said Levin in his first briefing with reporters since taking over as panel chair.

The 14-term Michigan Democrat took over the panel earlier this month after Rep. Charles Rangel stepped down amid several congressional ethics probes.

It is unclear how long Levin will stay on, though most people believe Rangel lacks enough political support to reclaim the top spot.

Lawmakers will need to find a way to pay for the cuts in the lower income categories, which will cost more than $2 trillion over a decade.

Levin, who has been more active on trade than tax issues, said he believes House Democrats back Obama's plan solidly, but added that we need to persuade enough people in the Senate to back it.

Levin said it is possible the committee will hold hearings to highlight the issue of inequities in the tax system and said he hopes to start work on the issue after the Easter break.


Levin also said he backs extending the 2009 estate tax policy for 2010. The estate tax expired this year after lawmakers deadlocked on a policy to extend it.

Under 2009 law, estates are taxed on their value above $3.5 million at a maximum 45 percent rate. With no action, the exemption amount drops to $1 million and the tax jumps to 55 percent in 2011.

Lawmakers are considering making the 2010 rate retroactive on an optional basis for taxpayers.

(Editing by Dan Grebler)