Skepticism is always widespread among Americans the morning after a State of the Union address, knowing full well that any good intentions proposed by President Obama will run into political gridlock.
In his speech, the president focused heavily on middle-class and working families, and he proposed a few tax breaks, or tax credits, which if Congress agrees would put a few more hundreds of dollars in the budgets of millions of American households.
However, only an expanded tax credit to cover the cost of child care seems to have a chance of winning bipartisan support, based on interviews with lawmakers and media reports following the State of the Union address.
“So it’s time we stop treating childcare as a side issue, or as a women’s issue, and treat it like the national economic priority that it is for all of us,” Obama said in his speech. ” And that’s why my plan will make quality childcare more available and more affordable for every middle-class and low-income family with young children in America — by creating more slots and a new tax cut of up to $3,000 per child, per year.”
The president is proposing to triple the child care tax credit to $3,000 per child under 5, which would help 5.1 million families cover child care costs for 6.7 million children, the White House says.
President Obama also wants to eliminate “loopholes that let the wealthiest and big corporations avoid paying their fair share in taxes” and use that money to “invest those savings to help middle-class families strengthen their standing in the 21st-century economy.”
Obama wants to reform the following to fund the tax breaks for working families:
The Trust Fund Loophole: The White House says that this loophole lets hundreds of billions of dollars escape taxation each year. The President wants to close the loophole to “ensure the wealthiest Americans pay their fair share on inherited assets.”
The Top Capital Gains Rate: Obama wants to return the top capital gains rate — or the rate at which the value of a capital asset like an investment or real estate property is taxed — back to 28 percent, the rate under President Ronald Reagan.
Fair Share from the Biggest Financial Firms: The president says he 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.
Here are the working-family tax breaks Obama wants to fund with the help of the above-mentioned reforms:
- Created a new $500 second-earner credit to help cover the additional costs faced by 24 million families where both spouses work.
- Triple the child care tax credit to $3,000 per child under 5.
- Provide students up to $2,500 a year toward completing a college degree. Obama says the 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.
- Make it easier and “automatic” for workers to save for retirement . The president says he wants to give 30 million more workers the opportunity to easily save for retirement through their employer.