President Obama gave a preview of what’s to come from Tuesday night’s State of the Union Address.
He is expected to focus on tax reform as well as the imposition of a new “fee” on the largest financial institutions of the U.S., says Time.
“Obama will call for the closing of the so-called trust fund loophole, which allows wealthy Americans to skirt some taxes when they pass on their earnings to heirs, as well as raising the capital gains tax rate to 28 percent for high-income households. The president plans to use the additional revenue to provide a new $500 tax credit for dual-earner families, expand childcare tax credits and the earned income tax credit, and pay for his previously announced initiative to provide two years of free community college for students.”
The new fee that will target liabilities of large financial institutions, combined with the loophole reforms, would raise an estimated $320 billion over 10 years, which would cover the free community college plan Obama recently outlined. The community college program is estimated to cost around $235 billion over 10 years’ time.
The liability fee is designed to target risky investments made by financial institutions with over $50 billion in liabilities. The 0.07 percent fee would focus on about 100 firms.
“Another proposal is to increase the top rates on long-term capital gains and dividends from 20% to 28%, the level they were at during the Reagan administration.
“Another State of the Union plank would triple the maximum child care tax credit, providing up to $3,000 per child under the age of 5.”
Obama will be joined in the box by several citizens who have written letters to the White House, including a woman who expanded her restaurant business using a Small Business Administration loan and an Afghanistan veteran paying off student loans.