Republicans cool to Obama’s proposal to raise taxes on rich
WASHINGTON (AP) — President Barack Obama will outline a plan to raise taxes on the wealthiest Americans during his nationally televised State of the Union policy address Tuesday, a message that could put tax-averse congressional Republicans in the spot of blocking measures that would offer broad economic benefits to the middle class.
With Republicans in control of both houses of Congress for the first time in eight years, the White House has no hope of the tax proposal becoming law, but Obama appears determined to push the measure as a means of highlighting the different goals of Democrats and newly ascendant Republicans.
An intense partisan battle between the two parties has dominated Obama’s first six years in office and is only growing fiercer with the 2016 presidential race heating up. In the early days of the new session of Congress, Obama already has threatened to veto five pieces of Republican-sponsored legislation aimed at undoing many of the key successes of his presidency — among them measures that would force construction of a pipeline to carry Canadian tar sands oil to refineries on the U.S. Gulf coast, overturn Obama’s executive actions on immigration and roll back his health care reform law.
Now he is further challenging the opposition party with a call for hefty tax increases on the wealthiest Americans and to use that revenue to provide tax breaks for middle-class earners.
The White House has outlined tax proposals that will be the centerpiece of his Tuesday speech. The plan would increase the capital gains tax rate on couples making more than $500,000 per year to 28 percent, the same level as under President Ronald Reagan in the 1980s. The top capital gains rate has already been raised from 15 percent to 23.8 percent during Obama’s presidency.
Obama also wants to close what the administration is calling the “trust fund loophole,” a change that would require estates to pay capital gains taxes on securities at the time they are inherited. Officials said the overwhelming impact of the change would be on the top 1 percent of income earners. Obama also wants to impose a fee on the roughly 100 U.S. financial firms with assets of more than $50 billion.
Raising the capital gains rate, ending the inheritance loophole and tacking a fee on financial firms would generate $320 billion in revenue over a decade, according to administration estimates. Obama wants to put the bulk of that money into a series of measures aimed at helping middle-class Americans.
Key Republicans in both chambers indicated they would oppose the plan.
“Slapping American small businesses, savers and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings and create jobs,” Sen. Orrin Hatch, chairman of the Finance Committee, said in a weekend statement.
Obama aides were not surprised.
“Are they going to agree on everything? Absolutely not. I think we should have a debate in this country between middle-class economics and trickle-down economics and see if we can come to an agreement on the things we do agree on,” White House senior advisory Dan Pfeiffer said.