• Latest News

    18 Jan 2015

    President Obama Will Seek to Reduce Taxes for Middle Class: The plan would also eliminate the “trust-fund loophole," increase the top capital-gains tax rate to 28% from 15% for couples with incomes above $500,000 annually, and add a new fee on banks with assets over $50 billion.

     President Obama will use his State of the Union address to call on Congress to raise taxes and fees on the wealthiest taxpayers and the largest financial firms to finance an array of tax cuts for the middle class, pressing to reshape the tax code to help working families, administration officials said on Saturday.

    The proposal faces long odds in the Republican-controlled Congress, led by lawmakers who have long opposed raising taxes and who argue that doing so would hamper economic growth at a time the country cannot afford it. And it was quickly dismissed by leading Republicans as a nonstarter.

    But the decision to present the plan during Tuesday’s speech marks the start of a debate over taxes and the economy that will shape both Mr. Obama’s legacy and the 2016 presidential campaign.

    It is also the latest indication that the president, untethered from political constraints after Democratic losses in the midterm elections, is moving aggressively to set the terms of that discussion, even as he pushes audacious moves in other areas, like immigration and relations with Cuba. 

    The president’s plan would raise $320 billion over the next decade, while adding new provisions cutting taxes by $175 billion over the same period. The revenue generated would also cover an initiative Mr. Obama announced this month, offering some students two years of tuition-free community college, which the White House has said would cost $60 billion over 10 years.

    The centerpiece of the plan, described by administration officials on the condition of anonymity ahead of the president’s speech, would eliminate what Mr. Obama’s advisers call the “trust-fund loophole,” a provision governing inherited assets that shields hundreds of billions of dollars from taxation each year. The plan would also increase the top capital-gains tax rate, to 28 percent from 23.8 percent, for couples with incomes above $500,000 annually. 

    Those changes and a new fee on banks with assets over $50 billion would be used to finance a set of tax breaks for middle-income earners, including a $500 credit for families in which both spouses work; increased child care and education credits; and incentives to save for retirement.

    The initiative signals a turnabout for Mr. Obama, who has spoken repeatedly about the potential for a deal with Republicans on business tax reform but little about individual taxation, an area fraught with disagreements. 

    “Slapping American small businesses, savers and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings and create jobs,” said Senator Orrin G. Hatch, Republican of Utah and chairman of the Finance Committee. “The president needs to stop listening to his liberal allies who want to raise taxes at all costs and start working with Congress to fix our broken tax code.”

    The proposal includes some elements that have previously drawn support from both Republicans and Democrats, including education and retirement savings proposals and the secondary earner credit. A tax on large banks was part of a plan proposed last year by former Representative Dave Camp, a Republican from Michigan who retired as chairman of the Ways and Means Committee.

    Mr. Obama’s advisers characterized the plan as the next phase in the president’s economic message, which he has been promoting over the past two weeks with trips highlighting the nation’s financial rebound. During the tour, Mr. Obama has pitched a range of initiatives to help the middle class, including free community college and paid leave.  The bulk of the financing for the plan — $210 billion — would come from a capital-gains tax hike and a change in the way the tax code treats the appreciated value of inherited assets. Under the proposal, inherited assets would be taxed according to their value when they were purchased. That means the capital gains on those assets during a person’s lifetime, now shielded from taxation, would be subject to tax at the time of the bequest.

    The proposal, which does not apply to charitable gifts, would fall almost entirely on the top 1 percent of taxpayers, administration officials said. It would apply to capital gains of $200,000 or more per couple, with an additional $500,000 exemption for personal residences.

    The remaining $110 billion to pay for Mr. Obama’s new tax proposals would be generated by a fee imposed on the largest and most highly leveraged financial firms. That proposal, administration officials said, was designed to make “risky activity” more costly for the roughly 100 such companies in the nation with assets more than $50 billion. Those companies would be assessed a fee based on the amount of debt they hold.

    White House officials estimated that the new $500 “second-earner” tax credit would benefit 24 million households. The maximum credit would go to those earning up to $120,000, and some credit would be available to those earning up to $210,000.

    Mr. Obama also wants to triple the child care tax credit, now an average of $550, and make it easier for middle-income earners to qualify, offering up to $3,000 for each child under age 5. White House officials said the plan would eliminate existing tax-advantaged flexible spending accounts for child care and reinvest those resources in the tax credit.

    In addition, the president is proposing to streamline a jumble of educational tax credits and give students up to $2,500 annually toward earning a college degree. Students who attend school less than half the time would also qualify for the first time, and more of the credit, $1,500, would be available regardless of whether an individual owed any taxes.

    Read More:http://www.nytimes.com/2015/01/18/us/president-obama-will-seek-to-reduce-taxes-for-middle-class.html
    • Blogger Comments
    • Facebook Comments

    0 comments:

    Post a Comment

    Thanks For Sharing Your Views

    Item Reviewed: President Obama Will Seek to Reduce Taxes for Middle Class: The plan would also eliminate the “trust-fund loophole," increase the top capital-gains tax rate to 28% from 15% for couples with incomes above $500,000 annually, and add a new fee on banks with assets over $50 billion. Rating: 5 Reviewed By: Orraz
    Scroll to Top