President Barack Obama will call for increasing taxes on the wealthiest Americans by raising the capital gains rate and eliminating a tax break on inheritances, then using the revenue to fund new tax credits and other cost-saving measures for the middle class, Yahoo news reported.
The president’s proposals are likely to be cheered by the Democratic Party’s liberal base, but the tax increases are all but certain to be non-starters with the new Republican majority on Capitol Hill.
Obama will announce the tax proposals Tuesday night in his State of the Union address. Senior administration officials disclosed details Saturday on the condition of anonymity because they were not authorized to discuss the proposals by name ahead of the president.
The president’s address — his first to a Republican-led Congress — will also include calls for lawmakers to make community college free for many students, increase paid leave for workers and enact broad cybersecurity rules.
The centerpiece of the president’s tax proposal is an increase in the capital gains rate on couples making more than $500,000 per year to 28 percent, the same level as under President Ronald Reagan. The top capital gains rate has already been raised from 15 percent to 23.8 percent during Obama’s presidency.
Loophole
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. Officials said the overwhelming impact of the change would be on the top 1 percent of income earners.
While GOP leaders have said they share Obama’s desire to reform the nation’s complicated tax code, the party has long been opposed to many of the proposals the president will outline Tuesday. For example, most Republicans want to lower or eliminate the capital gains tax and similarly want to end taxes on estates, not expand them.
“More Washington tax hikes and spending is the same, old top-down approach we’ve come to expect from President Obama that hasn’t worked,” a spokesman for House Speaker John Boehner, Michael Steel, said in a statement Saturday night. “Republicans are offering better solutions focused on helping small businesses grow and hire, and helping families improve their lives.”
