US Republican leaders have accused president Barack Obama of "class warfare" as he prepares to unveil plans to increase taxes for millionaires.

Obama is set to reveal details of the so-called "Buffett tax" – named after billionaire investor Warren Buffett, who has repeatedly called for the rich to pay higher taxes – on Monday. Obama looks set to propose a tax hike for those earning more than $1m a year as part of a wider plan to tackle the US's massive deficit.

The proposals, which have little chance of becoming law without Republican support, look set to become the latest battle ground for Republicans and Democrats gearing up for next year's election and an increasingly contentious fight over how to support the US's struggling economic recovery.

Paul Ryan, chairman of the House of Representatives budget committee, said: "Class warfare may make for good politics, but it makes for rotten economics." Speaking on Fox News Sunday, Ryan said the plan "adds further instability to our system, more uncertainty, and it punishes job creation and those people who create jobs." Ryan said higher taxes would hurt job creation. "If you tax something more, you get less of it," said Ryan.

Mitch McConnell, the Senate Republican leader, said the proposal would further damage the US's fragile economy. "We have thrown a big wet blanket over the private sector economy. We've borrowed too much, we've spent too much and we've dramatically over-regulated every aspect of the private sector in our country and now we are threatening to raise taxes on top of it. That's not going to get the economy moving," McConnell said on NBC's Meet the Press.

The fight comes as clashes between Republicans and Democrats over the economy intensify in the runup to next year's election. The would-be Republican presidential candidates will hold their next debate on Thursday and Obama's proposals are bound to be a central issue.

Former president Bill Clinton defended the plan. "The least harmful tax increases are the ones that senator McConnell and the people who agree with him hate the most, and that is restoring the tax levels that existed when I was president for those of us in high-income groups. That's the one that does the least harm."

Obama's proposal comes a month after Buffett began reviving his longstanding objection that he and his "megarich friends" pay significantly less tax than most people thanks to tax breaks that favour investors. "My friends and I have been coddled long enough by a billionaire-friendly Congress," he wrote in the New York Times. "It's time for our government to get serious about shared sacrifice."

Obama's poll ratings hit a new low last week, thanks to the continuing economic malaise in the US. According to the latest CBS/New York Times poll, Obama's approval rating is now 43%, down from 57% in May.

Those surveyed said the economy and jobs were the two biggest issues the US faces. Some 86% said the state of the US economy is either very bad or fairly bad. Nearly half – 48% – believe the nation is moving toward another recession.

Obama's millionaire tax hike will be a central component of the president's proposals to a special joint Congressional "super committee" that is working to reach a bipartisan budget deal by late November.

With unemployment now at 9.1% and income inequality at record levels, the president is hoping to put pressure on Republicans who have staunchly rejected any tax increases and have called for deep cuts in government spending on the US's Medicare, Medicaid and social security programmes.

Last week Republican speaker John Boehner said Obama should tackle tax reform to get rid of many tax breaks. "Tax increases, however, are not a viable option for the joint committee," Boehner said.

The tax fight comes in another tough week for Obama. The United Nations is set to vote on recognising Palestinian statehood this week after the US fought unsuccessfully to stop the vote taking place. Last week the Democrats lost a key congressional district in New York where some of the area's many Jewish voters said they were protesting against the administration's record on Israel.

He is also expected to meet European leaders amid fears that Europe's economic crisis will prove a further drag on the US's fragile recovery. US Treasury secretary Tim Geithner travelled to Poland last week to meet Europe's finance ministers and asked them to step up efforts to tackle the crisis. Geithner was rebuffed by Austria's finance minister, Maria Fekter. "I found it peculiar that even though the Americans have significantly worse fundamental data than the eurozone, they tell us what we should do and when we make a suggestion ... that they say no straight away," said Fekter.

Taxing America



• Last week the US census revealed that 46 million Americans – one in six – now live in poverty, the highest number ever.

• In 2010, the top 20% of Americans earned 49.4% of the nation's income. The top 1% account for 24% of all income.

• About 47% of US people pay no federal income taxes, either because their incomes are too low, or because they qualify for enough tax breaks to eliminate their liability.

• People who make money from investments pay far lower taxes than those who earn it from their wages.

• Last year Warren Buffett, who has a $50bn personal fortune, paid $6.9m in federal taxes – 17.4% of his taxable income. The other 20 people in his office paid between 33% and 41%.

• "While the poor and middle-class fight for us in Afghanistan and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks," Buffett wrote in the New York Times last month.

• This article was amended on 19 September 2011. The orginal