Saturday night, a senior Obama Administration official, who spoke on the condition on anonymity, revealed that President Obama plans to layout a new tax plan in his Tuesday State of the Union address that would benefit millions of Americans and raise $320 billion over the course of a decade.
According to the anonymous official, Obama’s proposal will include:
“Closing a loophole allowing the wealthiest Americans to pass on certain assets tax free, raising capital gains tax on the richest earners from 23.8% to 28%, and new fees on US financial firms with more than $50 billion in assets.”
The plan would benefit middle class Americans, with the money being used to fund some of President Obama’s other plans for the future. Says Julie Hirschfeld Davis of The New York Times:
“The revenue generated would…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.”
In addition to closing loop-holes and raising taxes on the wealthiest Americans, President Obama also plans to reveal more tax credits for middle class Americans. A $500 “second earner” tax credit could potentially benefit 24 million Americans, open to those making up to $120,000 a year.
A benefit to families with children, President Obama also plans to propose a higher child care tax credit. Hirschfeld Davis explains:
“Mr. Obama…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.”
The president’s plan could provide a tax reprieve for millions of Americans and also make college more accessible, but it is unclear what opposition he might face in congress. With Republicans holding both the Senate and the House, he faces an uphill battle. However, there is some hope that he might find bipartisan support for elements of his tax plan, as House Ways and Means Committee Chairman Dave Camp (R-Mich.) has previously suggested a similar tax on big banks. Unfortunately, only time will tell if President Obama’s ambitious tax plan will survive the Republican congress.