A Simpler, Fairer Tax Code? Obama’s New Plan for Your Money
In the lead up to the State of the Union address, the President has put forward proposals to help strengthen the middle class and build on the progress we have made to create good jobs and grow our economy. From proposing to make community college free for every responsible student and extending sick leave to working families, to acting on his own to cut mortgage premiums by $900 for families looking to buy a home, the President has already taken steps to ensure that all Americans can share in the benefits of our economic recovery.
Over the past six years, we’ve rescued and begun to rebuild our economy on a new foundation. Now we have to build on this progress, to raise wages and incomes, and strengthen the standing of working families in a new economy. On Tuesday, the President will lay out his vision for how to do that. A key part of that vision will include a new strategy to simplify our complex tax code, make it fairer by eliminating some of the biggest loopholes, and use the savings to responsibly pay for the investments we need to help middle class families get ahead and grow the economy.
The President’s plan will eliminate the biggest loopholes that let the wealthiest and big corporations avoid paying their fair share of taxes:
- Closing One of the Biggest Tax Loopholes – the Trust Fund Loophole: The President will propose to close the single largest capital gains loophole, which lets hundreds of billions of dollars escape taxation each year, to ensure the wealthiest Americans pay their fair share on inherited assets.
- Raising the Total Top Capital Gains and Dividends Rate Back to the Level Under President Reagan:The President will propose to raise the top capital gains rate to 28 percent – the rate under President Reagan.
- Making the Biggest Financial Firms Pay Their Fair Share: The President will continue to reform the way the largest financial firms do business by proposing a fee on the biggest financial firms, making it more costly for them to borrow heavily.
The President proposes to use the savings produced by these measures to reinvest in the middle class, helping millions of families each year and strengthening their standing in the 21st century economy:
- Helping Working Families: The President will lay out a new $500 second earner credit to help cover the additional costs faced by families where both spouses work – benefiting 24 million couples.
- Tripling the Child Care Tax Credit: The President’s proposal would streamline and dramatically expand child care tax benefits, providing up to $3,000 per child under 5, and helping 5.1 million families cover child care costs for 6.7 million children.
- Making College Accessible and Affordable: The President’s plan reforms the education tax system by consolidating six overlapping education provisions into just two and providing students up to $2,500 a year toward completing a college degree. His plan cuts taxes for 8.5 million families and students and simplifies taxes for the more than 25 million families and students that claim education tax benefits. The President has also proposed to make the first two years of community college free to any hardworking student.
- Saving for Retirement: The President’s plan makes it easy and automatic for workers to save for retirement – giving 30 million more workers the opportunity to easily save for retirement through their employer.
The President’s proposals to take these and other steps to make the tax system more fair will also finance the his plan to make community college free for responsible students and additional investments in improving child care quality, access, and affordability for working families.