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.
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OBAMA'S TAX PROPOSALS
— 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.
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HOW OBAMA WOULD SPEND THE MONEY
— 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.