In an effort to shrink the widening gap between the middle class and the wealthiest Americans, President Obama will urge Congress to hike taxes and fees on the rich to cover tax breaks for the middle class.
Obama will detail his proposal during his State of the Union address Tuesday, The New York Times reports.
The plan won’t be popular in the Republican-controlled Congress, but it “marks the start of a debate over taxes and the economy that will shape both Mr. Obama’s legacy and the 2016 presidential campaign,” the Times said.
The president’s proposal would raise top capitals gains tax rates and get rid of a tax break on inheritances, according to The Associated Press. The capital gains rate would increase from 23.8 percent to 28 percent for couples earning more than $500,000 per year.
“Obama 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,” the AP said.
The president also wants to impose a fee on about 100 U.S. financial firms whose assets total more than $50 billion, “basing the fee on liabilities in order to discourage risky borrowing,” The Huffington Post said.
It’s estimated that Obama’s proposal to tax the wealthy, mainly the top 1 percent of taxpayers, would generate $320 billion in additional tax revenue over the next 10 years. That would help finance tax breaks for the middle class HuffPo said:
The president’s plan would use revenues from those tax code changes to finance credits aimed at the middle class, officials said. That includes extending the earned income tax credits to families without children, which would benefit an estimated 13 million low-income workers, while also tripling the maximum tax credits for child care in low- and middle-income homes.
“This proposal is probably the most impactful way we can address the manifest unfairness in our tax system,” an administration official said.
Republicans have been quick to dismiss Obama’s proposal, the AP reports.
“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,” Sen. Orrin Hatch, R-Utah, the chairman of the Finance Committee, said in a statement. “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.”
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