TAXES - President Obama's Middle Class Tax Plan

"Inside Obama’s middle class tax plan" PBS NewsHour 1/18/2015

Excerpt

SUMMARY:  President Obama will reportedly unveil a plan to offer tax relief for the middle class during his State of the Union address on Tuesday night.  The plan would be paid for by increasing taxes the rich pay on investments and inherited property.  For more, Carol Lee of the Wall Street Journal joins Hari Sreenivasan from Washington.

HARI SREENIVASAN (NewsHour):  President Obama reportedly will unveil a plan to offer tax relief for the middle class during his State of the Union address Tuesday night.  The plan would be paid for by increasing taxes the rich pay on investments and inherited property.

For more about the president’s proposal, its chances of success, and its political impact, we’re joined now from Washington by Carol Lee. She is White House correspondent for The Wall Street Journal.

So, Carol, who does the administration say that this will help, and how?

CAROL LEE, The Wall Street Journal:  Their main target is the middle class.

And they — their argument is that it will help the middle class by taking — closing certain tax loopholes that they say benefit the top 1 percent of Americans and making different changes to the tax code, including raising the capital gains tax from 23.8 percent to 28 percent by, as you mentioned, taxing some of these investments and assets that people transfer to their children that currently are not taxed and a number of other things.

And what they do with that money, which is roughly several hundred billion dollars, is put it towards proposals such as tripling the child tax credit.  So, that would go from $1,000 to $3,000.  They’re proposing to create a new tax credit for households where both spouses work.

And they would — the president has unveiled a proposal to offer free community college for folks.  And that’s another thing that — that this would pay for.  And so it’s kind of — it’s basically the president’s opening bid on a number of tax issues that have been vexing Washington for a long time.

And, so far, it has not gotten a very warm reception from Republicans.  But the White House’s argument is that this would help the middle class, the Republicans say that they are now focused on the middle class, the economy is doing better, and so now is the time to do things — things — take steps like this.

And while conceding that they probably won’t get everything that they want, which is a very optimistic view of this package, given the response we have seen from Republicans, the hope is that this is an opening bid to what the White House hopes are broader negotiations on some of these individual tax code issues.