Tags: SOTU 2015 | obama | tax | hikes | sotu

Obama Plans to Announce Massive Tax Hike in SOTU

Image: Obama Plans to Announce Massive Tax Hike in SOTU
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By    |   Tuesday, 20 Jan 2015 08:59 AM

President Barack Obama on Tuesday is expected to propose billions of dollars in tax increases and government spending in his State of the Union address, igniting the ire of the Republican Party and a debate about how best to address the needs of the middle class, according to The Wall Street Journal.

Tax reform has been a top issue that the new Congress planned to tackle, with expectations that there would be bipartisan cooperation for an overhaul to the tax system. But Obama's plan for a hike may have derailed hopes of a constructive working relationship.

"This is just another poke in the eye at Republicans, rather than showing a willingness to cooperate," Louisiana GOP Rep. Charles Boustany, a member of the tax-writing Ways and Means Committee, told the Journal.

"If the president were really interested in tax reform, rather than making political statements, he would have approached Congress and members of the Ways and Means Committee in thoughtful ways."

Obama made the surprise announcement this weekend that he will propose $320 billion in tax increases over 10 years, targeted at high-income Americans. He said he plans to use the hikes to fund $235 billion in tax breaks for middle-class workers. He also wants $150 billion for infrastructure investments through rewrites to the business tax code.

Specifically, tax increases would be targeted on investments held by high-income households through increases in the capital gains tax rates and also by introducing capital gains taxes on many inherited assets, the Journal reported. The top capital gains rate would rise to 28 percent from 23.8 percent.

The gains in revenue would go toward tripling the child care tax credit for middle-income households and creating a new $500 tax credit for dual-earning families. The plan is also to triple the value of the child care credit to $3,000 per child, the Journal reported.

In addition, the administration plans to consolidate and expand education tax breaks, according to the Journal, while making retirement savings programs accessible to an additional 30 million people.

Republicans of late, including potential 2016 presidential candidate Jeb Bush, have said they want to improve the economic position of the middle class, tackle income stagnation, and find ways to combat the unemployment rate.

Florida Sen. Marco Rubio has called for increasing the child tax credit and also creating a monthly credit for low-income earners. Kentucky Sen. Rand Paul believes there should be tax breaks to promote investment in low income communities.

But the administration is already bashing the intentions of the GOP.

"If Republicans, who now speak of poverty and income inequality with some regularity, want to defend a tax loophole of trust funds for the wealthiest of Americans, then we look forward to hearing that argument," a senior administration official told the Journal.

"We're going to make the counter on Tuesday night. We are calling it middle-class economics."

The GOP has already come out swinging against Obama's proposals for tax increases, insisting they will not pass through Congress.

Nevertheless, they, like the president, are focused on boosting the incomes of working families through federal programs and different types of tax plans.

Democrats are heavily supporting the president's plans and some even believe the tax hike proposals don't go far enough, according to the Journal.

"By seeking to address economic inefficiencies, including in our capital gains structure, and targeting these revenues toward investment in education and support for working parents, the president's proposals would address the key issue of wage stagnation for most families," Michigan Rep. Sander Levin, the top Democrat on the House Ways and Means Committee, told the Journal.

In proposing the hikes, Obama may also be seeking to set up an economic populist narrative to take Democrats into the 2016 presidential election, the Journal reported.

Republicans are indicating they too have a goal of helping the middle class but say across-the-board tax cuts are the best way to boost the economy, the Journal said.

"The best opportunity for someone in the lower class is a good job, and that idea should be the idea we're promoting, rather than taking from one to give to another," Tennessee Rep. Diane Black, a Ways and Means Committee member, told the Journal.

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President Barack Obama on Tuesday is expected to propose billions of dollars in tax increases and government spending in his State of the Union Address, igniting the ire of the Republican Party and a debate about how best to address the needs of the middle class, according...
obama, tax, hikes, sotu
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2015-59-20
Tuesday, 20 Jan 2015 08:59 AM
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