Obama Seeks To Reduce Middle Class Taxes, Close Loopholes For Wealthy

Above: President Obama previews his State of the Union speech with three stories of Americans making progress in the recovering economy.

In his State of The Union address this week, President Obama will propose congress lower taxes on the middle class and close loopholes that the rich often use. A press release from the White House says Obama has a strategy that will “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.”

According to a release from the White House Press Secretary, the changes President Obama will propose include:

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 press release details who will benefit under President Obama’s proposal:

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.

Michael McIntee

Michael McIntee is a former network TV news executive with more than 30 years of broadcasting experience. He began his broadcasting career at the University of Minnesota's student radio station. He is an expert producer, writer, video editor who has a fondness for new technology but denies that he is a geek. More about Michael McIntee »

60 thoughts on “Obama Seeks To Reduce Middle Class Taxes, Close Loopholes For Wealthy

  1. Everyone except enron pays taxes when it comes in, and when it goes out. You cant avoid taxes unless you can hire a lawyer to make you effectivly tax free. You side with the real parasites. Those who rob millions at a time and recieve praise for their abilities in the form of movies and stories. They are the real criminals, who make mom and pops life work count for nothing in the name of efficiency.

  2. Speaking as a senior citizen – only a portion of Social Security is taxed; if SS is your only source of income, you pay no tax at all. Your IRA or 401(k)/403(b) was not taxed when you made contributions; their appreciation accumulated tax-free. If you sell your home to move into cheaper digs, or a managed-care facility, the first 250K profit on the sale is tax-free. You get an extra-sized standard deduction if you even have to file.

    I get really tired of old farts like me whining about how they get screwed on their taxes.

  3. Clinton had the budget balanced and was paying down the deficit. George the Second, busted the budget, gave to the rich, started 2 wars, and started the Great Recession. Obama has finally gotten the unemployment rate down, GNP growing, and factories started hiring again. Yet the Republicans want to return to massive borrowing, high unemployment, rich getting richer, and the poor and middle class getting poorer. Oh, and let’s not forget their “other goal”, all women barefoot, pregnant, and restricted to serfdom.

  4. No deductions and no exceptions is the ONLY way to do it! If you open the door for 1 exception, then its open for all of the other special interests. That’s why the system is broken.

    I was talking about personal income tax. I don’t know what you’re referring to with regard to “Why should your employer have to pay taxes on the money he paid you and then you pay them again.”

  5. 10% of a million is $100,000! 10% of 50k is $5,000. We collect taxes to pay for government. $100,000 pays for 20 times more government than $5,000 does. You cant say 1 person paying for 20 times more government than another is “not enough”. Its all about spreading the cost of essential government amongst the people being governed in a way that doesn’t overburden anyone. It’s not about taking away a person’s earned income to give to another because they were more successful in terms of financial gain.

  6. I can assure you, I understand fairness quite well. Under a flat-tax system, the wealthy would not be able to avoid taxes like they do now with huge loopholes and special rates for capital gains. All income would be taxed the same, regardless how you earned your money. The huge problem with today’s system is that way too many pay zero income tax, so have no second thoughts about continuing to raise taxes on “others”. 10% of a $10,000 income would burden the low-income person as much as 10% on a $100,000,000 income for the super-wealthy. Neither could shirk their citizenship responsibilities.

  7. Don’t think you have a clue of what I’m proposing. Please read below. Britain, France, the Royals? A flat tax works well in previously Communist-dominated Eastern Europe because it works, is truly fair, and nobody gets a free ride on the train.

  8. I am not quite in your status, I’m whining because I work and my wife works but the kids are gone. So i’m stuck with the “PROGRESSIVE” income tax rate. Why work harder at a middle class wage but be considered wealthy, especially when you rely on 2 incomes. Yup it’s a whine but I think it sucks, we are not wealthy but get taxed at the wealthy rate. You are punished for working hard.

  9. One of the legs of my retirement financial stool is to continue working, until recently at two jobs (my wife is fully retired). So I know that verse of the song. Depending on how you do the calculation, about 1/3-1/2 of our disposable income is due to continued employment. I don’t complain about the modest tax I pay, including tax on most of my SS, and of course, on all of my pension. With a 15% marginal rate (and only 5.5% effective tax rate), I estimate tax preferences related to my retirement income save me about $3400 this year. That doesn’t include avoided costs like insurance and medical bills due to Medicare.

    I just figure this is a fair cost to live the way I want to after a long and moderately successful career. Life, and the US, has been good to me.