President Proposes $320 Billion Tax Hike
In the name of bipartisanship President Obama, in his State of the Union address, has proposed $320 billion in new tax increases. I’m sure you’ve detected my sarcasm. Obviously most, if not all, of these proposed taxes will be shot down by both houses of Congress, which are currently controlled by the Republicans.
President Obama proposed $320 billion in higher taxes in his State of the Union address, mostly by raising the rate on capital gains and closing tax loopholes for wealthier families.
The centerpiece of the president’s tax proposal is an increase in the capital gains and dividends rate on couples making more than $500,000 per year to 28 percent. The top capital gains rate has already been raised from 15 percent to 23.8 percent during Obama’s presidency.
The president also wants to close what the administration is calling the “Trust Fund Loophole,” a change that would require estates to pay capital gains taxes on securities at the time they’re inherited. Officials said the overwhelming impact of the change would be on the top 1 percent of income earners. This statement confounds me a bit because it appears that this tax increase will affect middle-class taxpayers who receive inheritances from estates as well.
Mr. Obama also will call on lawmakers to impose a new fee on big banks with more than $50 billion in assets to discourage risky financial investments. Officials said the fee is similar to a proposal from former Republican Rep. Dave Camp of Michigan.
The President, in his State of the Union address, also proposed taxing the earnings on 529 savings accounts, used by millions of Americans to save for college. The administration complained that the benefits in these plans “accrues too heavily towards higher-income Americans”. I found the reasoning behind this proposal to be very unrealistic; many of my “middle-class” clients and friends have utilized 529 plans to save and pay for their children’s educations.
On the date of this article, the Obama administration said it would drop its plan to tax 529 college saving accounts, after receiving widespread criticism over its potential impact on the middle class.
