Just as the U.S. economy is beginning to recover, President Obama is hoping to hit Americans with $320 billion in new taxes — but Republicans call his plan a non-starter in the newly GOP-controlled Congress.
Seeking a battle with Republicans, Obama will propose the higher taxes in his State of the Union address. The massive haul would come from raising the rate on capital gains taxes and changing the death tax laws to seize more wealth from widows and heirs.
In addition to the new taxes, Obama will call on lawmakers to impose a new fee on big banks with more than $50 billion in assets to discourage risky financial investments (what are the odds those charges get passed on to bank customers?)
Republicans said the proposals likely won’t go anywhere — and for good reason, said Sen. Orrin Hatch.
“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 the Utah Republican, 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.”
Liberal mainstream media sources like the New York Times, Associated Press and ABC News, painted the move as a boon for average Americans. “OBAMA’S ADDRESS TO PITCH TAX PROPOSALS TO HELP MIDDLE CLASS,” yelled the AP. “Obama Will Seek to Raise Taxes on Wealthy to Finance Cuts for Middle Class,” said the Times. “Obama to Propose Capital Gains Tax Hikes to Benefit Middle Class,” wrote ABC.
But the new taxes would hit people in the middle class — and perhaps even lower. According to the death tax plan, the administration’s proposal would exempt the first $200,000 in capital gains per couple plus $500,000 for a home. The rest would be treated for income-tax purposes as if it had been sold.
That means if you inherited a home worth, say, $750,000, you’d be taxed as if you just deposited $250,000 into your bank account. Back in the days when capital gains rates were 28 percent or even 39.9 percent, people who inherited homes were sometimes forced to sell just to afford the taxes. The rate, which was 15 percent under President George W. Bush, was raised under Obama to 23.8 percent. The president’s plan calls for that to be hiked to 28 percent.
Obama wants the extra cash to pay for a variety of domestic-spending proposals for the middle class, including a plan to make community college gree for everyone.
One administration official told The Washington Times that the new death tax is meant a “trust-fund loophole” that allows wealthy individuals to pass along certain investment gains to heirs without being taxed.
“Hundreds of billions [worth] of capital gains go untaxed every year,” the official said.
The president also plans to offer some smaller benefits to the middle class. He will propose a $500 “second earner” tax credit to help cover certain costs faced by families where both parents work; triple the child-care tax credit to as much as $3,000 per child under age 5; provide students up to $2,500 a year toward completing a college degree (this proposal is in addition to the free community college plan).
The bank fee, believed to target about 100 financial institutions, would discourage risky investment practices by “making it more costly for them to borrow heavily,” the White House said.