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White House pushes Obama tax plan as Republicans line up to voice opposition


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Announcement comes ahead of Tuesday’s State of the Union address, where president will outline $320bn plan to help struggling middle class

 

 

President Barack Obama will use Tuesday’s State of the Union address to present a three-point plan to help struggling American families, spelling out the defining philosophy of his presidency as “middle-class economics” in contrast to the trickle-down economics of the Republicans.

 

Dan Pfeiffer, the senior White House adviser, did the round of Sunday television talk shows to lay the ground for a speech he said could be boiled down to just three words: “middle-class economics”. He told CBS the president would concentrate on “how we make paychecks go further right now, how we create more good-paying jobs right now, and how we give people the skills to get those high-paying jobs”.

 

As Obama’s penultimate State of the Union approaches, it is taking on the overtones of a campaign strategy as much an expression of the practical agenda of an executive in his final two years in office. He is clearly exercised to define his legacy in stark contrast to the Republicans, with whom he has been at loggerheads through much of his presidency.

 

On Saturday, the White House previewed the key tax component of its plan for the coming year. It proposes raising about $320bn additional revenue by increasing capital gains and dividends rates to 28% for wealthy couples with more than $500,000 in annual income, by closing a loophole by which the rich can avoid tax on the inheritance they pass to their heirs through trust funds, and by introducing a new fee on big banks and financial services companies carrying heavy debts.

 

That money would be used to fund a $500 tax credit for families in which both spouses are working, a tripling of childcare tax credits to $3,000, provisions to allow people not covered by company pension plans to save for retirement, as well as paid sick leave and two years of free community college for those who qualify.

 

Observers are astonished by the audacity of a plan that at its core involves increasing taxes on the rich to pay for benefits for the middle class. Previous attempts under Obama’s presidency to pull off such redistributive measures have been rebuffed by the legislature, even before the Republicans took the reins of both houses of Congress as they did this month.

 

Related: Obama's State of the Union could ramp up climate fight with Republicans

Already, prominent Republicans have lined up to denounce the tax plan. Paul Ryan, the new chairman of the House ways and means committee, dismissed it as “not a serious proposal”.

 

Marco Rubio, the senator for Florida who is considering a presidential run in 2016, accused Obama on CBS of following a “20th-century outdated model. The notion in order for some people to do better someone has to do worse is just not true”.

 

Rubio said the proposals would be counter-productive. “Raising taxes on people who are successful is not going to make people that are struggling more successful,” he said. “The good news about free enterprise is that everyone can succeed without punishing anyone.”

 

But Pfeiffer said the White House was convinced common ground could be found. And where it was impossible, he implied that Obama was determined to make clear to the American people where both main parties stood on the arguments.

 

“The Republicans have a very different philosophy about how the economics work,” Pfeiffer said, adding that “in a divided government, each side should lay out their agenda, what they think is in the best interests of the country, and then we can figure out what we can agree on”.

 

At its heart, Obama’s “tax the rich to help the poor” scheme is designed to address a growing anomaly in the modern US economy. As Pfeiffer stressed, the main indices of the US economy are looking increasingly robust, including job growth and deficit reduction.

 

But many working Americans are not feeling the benefits, as a result of stagnating wages and declining economic mobility. Research suggests that the US has been knocked off its pedestal as having the world’s richest middle class.

 

Obama knows that to secure the legacy of his two-term presidency he must succeed in generating the same sort of feelgood factor among middle-income Americans as Bill Clinton did in the 1990s. If he fails, he risks leaving office at a time when income inequality in the country is as high as it has ever been – presenting Republicans with a gift in the 2016 race for the White House.

 

Paradoxically, that theme has already been seized upon by Obama’s presidential challenger in 2012, Mitt Romney, who is considering running again. Addressing Republican leaders in San Diego on Friday, he baited Obama by talking about the “scourge of poverty”.

 

The former Massachusetts governor said that “in the post-Obama era we need to stand for safety, and for opportunity for all people, and we have to stand for helping lift people out of poverty”.

 

 

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President Barack Obama will lay out his plan Tuesday and put the new Republican-controlled Congress in the position of defending top income earners over the middle class. Photograph: Carolyn Kaster/AP

 

 

http://www.theguardian.com/us-news/2015/jan/18/white-house-obama-tax-plan-republicans

 

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