Highlights of Obama Plan to Tax Wealthy

(AP) —

The White House says President Barack Obama will propose in his State of the Union address a plan to impose higher taxes on the wealthy and use the revenue to help middle-class families. Congress would have to agree, and lawmakers have rebuffed Obama’s earlier proposals to eliminate certain tax provisions and spend the money on road and bridge repair, for example.



– Eliminate a tax break on inheritances. The White House says the provision costs the government hundreds of billions of dollars in annual tax revenue.

– Increase the total top capital-gains rate on couples with incomes above $500,000 to 28 percent, what it was under President Ronald Reagan. The top capital-gains rate has already been raised from 15 percent to 23.8 percent during Obama’s presidency.

– Impose a fee on big financial firms, those with assets of more than $50 billion. The White House said the idea is in line with a proposal that was in a comprehensive tax-overhaul plan unveiled during the previous session of Congress by then-Rep. David Camp, R-Mich., at the time the chairman of the tax-writing House Ways and Means Committee.

Raising the capital-gains rate, ending the break on inheritances and imposing a fee on financial firms would generate $320 billion in revenue over a decade, according to administration estimates.



– A new $500 “second earner” tax credit for families where both spouses work. An estimated 24 million couples would benefit; the credit would apply to families with annual income up to $210,000.

– Expand the child-care tax credit to up to $3,000 per child under age 5. The administration says the proposal would help more than 5 million families pay for child care.

– Consolidate six overlapping education tax breaks into two. Republicans have been open to the idea of streamlining education tax breaks.

– Expand the Earned Income Tax Credit to workers without children and to noncustodial parents.

– Boost retirement savings by automatically enrolling in an Individual Retirement Account people who don’t have access to a workplace retirement plan, and expand access to employer retirement plans for certain part-time workers.

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