Obama to Propose Tax Increases on Investments, Inherited Property

Hey, now that's a surprise.

Wealth taxes. For leftists, an idea whose time has come.

At the Wall Street Journal, "President Expected to Outline Tax Measures in State of the Union Address":

WASHINGTON — President Barack Obama will call on the new Republican-led Congress to raise taxes on investments and inherited property and to create or expand a range of tax breaks for middle-income families, laying out an opening position in a debate over taxation that both parties see as a potential area of compromise.

Mr. Obama will outline the measures in his State of the Union address Tuesday night. He will propose using revenue generated from the tax increases—which would fall mainly on high-income households—to pay for a raft of new breaks aimed at boosting stagnant incomes for low- and middle-income households.

Those initiatives include tripling the child-care tax credit and creating a new credit for families in which both spouses work, senior administration officials said on Saturday.

The administration plans to consolidate and expand education tax breaks. It would also make retirement savings programs available to many more people, for example by requiring many employers that don’t currently offer workers a retirement plan to enroll them automatically in an individual retirement account. The administration says its proposals would make retirement saving programs available to 30 million additional people at the workplace.

Mr. Obama’s address Tuesday will start the process of determining where he might find common ground with the new Republican Congress. Both the president and GOP leaders have said that a tax overhaul, along with trade, might yield compromises.

The president’s proposals go well beyond overhauling business taxes, which the White House has previously expressed a willingness to undertake, to include changes to the individual tax code. Republican lawmakers have argued that a tax overhaul should be aimed at both businesses and individuals.

At the same time, the new White House position could complicate the debate, by underscoring deep philosophical differences between the parties. In particular, Mr. Obama’s tax increases are likely to draw opposition from Republicans.

The White House plan would make broad changes to the tax bills of wealthier taxpayers, mainly by raising the taxes they pay on investments. The top capital gains rate would rise to 28% from 23.8%. The plan also would impose capital-gains tax on more inherited assets.

It also would create or expand several significant tax breaks for low- and middle-income households, for instance by establishing a new $500 credit for families in which both spouses work, and by tripling the value of the child care credit to $3,000 per child. The changes also would significantly expand the availability of the child-care credit to more middle-income households.

Republican lawmakers generally have opposed raising taxes on higher-income earners, as Mr. Obama proposes. They also have bridled at some recent Democratic legislative proposals for new tax breaks to expand incomes for moderate-income families. Democrats “are just out buying [people’s] votes” with such plans, Finance Committee Chairman Orrin Hatch (R., Utah) said in a recent interview. Mr. Obama’s capital gains rate increase is likely to come in for particular criticism, although administration officials argue the 28% rate is still lower than the ordinary income rate for high earners.

The administration said the tax increases would raise revenue by about $320 billion over the next decade, while the new tax breaks and other initiatives would cost about $235 billion. The administration didn’t detail its plans for the additional revenue.

The tax proposals represent a part of the administration’s broader strategy to raise stagnant middle-class incomes, a prominent topic in Washington lately.

More at that top link.