President Obama Proposes $320 Billion Tax Increase on the Wealthy to Fund Middle Class Tax Cuts

In advance of Tuesday's State of the Union Address, the White House yesterday released Fact Sheet: A Simpler, Fairer Tax Code That Responsibly Invests in Middle Class Families. 

The plan would raise $320 billion in revenue over ten years.  Key components include:

• Close the trust fund loophole – the single largest capital gains tax loophole – to ensure the wealthiest Americans pay their fair share on inherited assets. Hundreds of billions of dollars escape capital gains taxation each year because of the “stepped-up” basis loophole that lets the wealthy pass appreciated assets onto their heirs tax-free.
• Raise the top capital gains and dividend rate back to the rate under President Reagan. The President’s plan would increase the total capital gains and dividends rates for high-income households to 28 percent.
• Reform financial sector taxation to make it more costly for the biggest financial firms to finance their activities with excessive borrowing. The President will propose a fee on large, highly-leveraged financial institutions to discourage excessive borrowing.

The plan includes a bevy of middle class tax cuts totaling $175 billion over ten years, including:

• Provide a new, simple tax credit to two-earner families. The President will propose a new $500 second earner credit to help cover the additional costs faced by families in which both spouses work — benefiting 24 million couples.
• Streamline child care tax incentives to give middle-class families with young children a tax cut of up to $3,000 per child. The President’s proposal would streamline and dramatically expand child care tax benefits, helping 5.1 million families cover child care costs for 6.7 million children. The proposal will complement major new investments in the President’s Budget to improve child care quality, access, and affordability for working families.
• Simplify, consolidate, and expand education tax benefits to improve college affordability. The President’s plan will consolidate six overlapping education provisions into just two, while improving the American Opportunity Tax Credit to provide more students up to $2,500 each year over five years as they work toward a college degree – cutting taxes for 8.5 million families and students and simplifying taxes for the more than 25 million families and students that claim education tax benefits.
• Make it easy and automatic for workers to save for retirement. The President will put forward a retirement tax reform plan that gives 30 million additional workers the opportunity to easily save for retirement through their employer.

• Bloomberg, Obama Proposes New Tax Increases on Wealthy to Help Middle Class
• Bloomberg, Republican Lawmakers Attack Obama Tax Proposal
• Financial Times, Obama Targets Top 1% With $300bn Tax Plan
• Fiscal Times, Republican Pushback on Obama’s Tax Plan Has Begun
• Forbes, Obama Pitches Capital Gains Hike To 28% In 'Simpler, Fairer' Tax Code
• Forbes, Obama's Proposed Tax Changes; The Bad, The Needs Tweaking And The So So
• Roll Call, Obama Would End Death Tax Break for Wealthy to Fund Middle Class Tax Breaks, Programs
• New York Times, Driving the Obama Tax Plan: The Great Wage Slowdown
• New York Times, Obama Will Seek to Raise Taxes on Wealthy to Finance Cuts for Middle Class
• New York Times, Obama’s Tax Proposal Is Really About Shaping the Democratic Party After Obama
• Think Progress, What You Need To Know About Obama’s Proposal To Tax The Rich
• USA Today, Obama to Unveil Tax Package at State of the Union
• Vox, Obama's State of the Union Will Include a Major New Tax Reform Proposal. Here It Is.
• Wall Street Journal, Obama to Propose Tax Increases on Investments, Inherited Property
• Washington Post, Obama’s New Tax Plan Would Go Straight After Mitt Romney’s Money