Days ahead of President Obama’s 2015 State of the Union address to Congress, the White House has released a “sneak peak” of topics the president will cover, with an emphasis on economic and tax reforms on his agenda for the year.
Obama has plans to call for billions in tax increases on the wealthy, including an increase in investment tax rates, to fund tax credits and other measures designed to help the middle class, according to Fox News. The measures will call for $320 billion in tax increases over the next decade.
[quote text_size=”small” author=”– Senior Obama administration officials”]
The middle class has yet to experience the prosperity shown in the recovery and what will be new on Tuesday night is the vision that he has for how we finish that job and how we ensure that the middle class can share in that prosperity.
The centerpiece of the proposal is rising the capital gains and dividends rate on couples who earn more than $500,000 a year to 28%, which is the same rate as under President Reagan. During Obama’s presidency, the top capital gains rate has been raised from 15% to 23.8%.
The president will also call for closing what officials have dubbed the “single biggest loophole in our tax system today: the trust fund loophole.” As it stands, portfolios and estates that rise in value can avoid certain taxes when passed to heirs. Obama proposes a change that would require estates to pay capital gains taxes on securities when they are inherited, which would affect the top 1% of income earners in the country, according to ABC News.
The bulk of the revenue from the increased taxes would be put toward helping the middle class. Obama proposes a credit of up to $500 for families in which both spouses work, benefiting 24 million couples in the United States. Among the other measures are an expansion of the child care tax credit to up to $3,000 per child under 5; consolidating six education tax provisions into two to reduce taxes for 8.5 million families; and a requirement for more employers to automatically enroll employees in IRA accounts and offer retirement savings plans to part-time employees, according to USA Today.
There will undoubtedly be a great deal of resistance to the proposal, as most Republicans want to lower or completely eliminate capital gains taxes and taxes on estates.
The Obama administration has spent weeks promoting other issues he plans to discuss in the address, including proposals on community college, paid leave, cybersecurity and housing.