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1910 Income Tax Promised To Never Shift Burden From Richest 1 - 4%
238 Presidential Historians Rank Obama Near The Top: Dubyah Near The Bottom
1910 Income Tax Promised To Never Shift Burden From Richest 1 - 4%
Obama Will Propose Capital Gains Tax Hikes To Benefit Middle Class
Senior White House officials say President Obama will use his state of the union to float several new economic ideas, including tax hikes on capital gains and wealthy inheritances, and new fees on the largest financial firms to pay for more middle class-friendly tax credits and cuts.
The price tag to the wealthiest Americans and those large financial institutions? According to senior White House officials it could be $320 billion over 10 years.
The president will propose raising the capital gains rate to 28 percent, up from 15 percent, which is the maximum most taxpayers pay now.
The president will also call for closing what the officials called "the single biggest loophole in our tax system today: ... the trust fund loophole," which allows portfolios and estates that increase in value to evade certain taxes when passed on to heirs.
The officials said "hundreds of billions of dollars of capital gains every year go untaxed entirely."
Closing that loophole will mean "every American, even the wealthiest ones, actually pay taxes on the gains," the officials said, adding that 99 percent of the impact of this action would affect only the top 1 percent of taxpayers.
The new proposal would also protect middle class taxpayers by adding exemptions for heirlooms and bequests under $200,000 for couples and property with value under $500,000 for couples.
They also said the new structures would not add a "compliance burden" to middle class taxpayers, but didn't elaborate on the details.
The president is also proposing special protections for small, family-owned businesses that are passed down, where no tax would be due unless or until the business is sold, and any "closely held business would have the option to pay tax on gains over 15 years."
The total amount of money raised for the government by these actions would be about $210 billion over 10 years, they said.
The second component of increasing government revenue is adding fees to about 100 financial institutions that engage in the highest risk borrowing and lending -- the kind that contributed to economic trouble seen in the last decade, the officials said.
Those institutions would have to each have over $50 billion in assets.
The president's proposal would impose a "seven basis point fee on the liabilities" of the firms. That would "lead (the firms) to make decisions more consistent with the economy-wide effects of their actions, which would in turn help reduce the probability of major defaults" and add $110 billion to government coffers over 10 years, according to a White House fact sheet and senior administration officials.
The officials said $175 billion of the money would go directly to proposals to benefit the middle class. They added to that the $60 billion over 10 years that they expect will be the cost of the "free" community college plan they rolled out last week, making the total $235 billion in new spending.
That's still below the $320 billion they expect to raise with the new taxes and fees above, they point out.
"The middle class has yet to experience the prosperity shown in the recovery and what will be new on Tuesday night is the vision that he has for how we finish that job and how we ensure that the middle class can share in that prosperity," one of the senior administration officials said.
To that end, the president's proposal will include:
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