WASHINGTON — President Barack Obama will ask Congress Tuesday to provide a $500 “second earner” tax credit and expanded child tax credits for children under age 5 to help cover child care costs as part of an ambitious State of the Union address his aides say will prioritize help for middle class families.
But to cover the costs, the president will propose $320 billion in higher taxes for the affluent over the next 10 years, including increasing the capital gains and dividend tax rate for wealthy Americans from 15 percent to 28 percent, increasing the amount of inherited money subject to estate taxes and applying a fee for about 100 of the nation’s
largest financial institutions when they borrow.
Republicans, who control both the House and Senate, have opposed higher taxes and fees to reduce taxes for the middle class in the past and already were expressing opposition hours after the White House released the outlines of the president’s plans Saturday night.
‘The president needs to stop listening to his liberal allies who want to raise taxes at all costs and start working with Congress to fix our broken tax code,” said Senate Finance Committee Chairman Orrin Hatch, R-Utah.
But the White House said that with job growth solid over the last two years, and large financial institutions rescued from the 2008 recessions, now is the time to help middle class Americans, many of whom continue to experience stagnant salaries but increasing costs for child care and higher education.
Increasing the tax credit for children up to five to $3,000, the White House said, would make it easier for parents to afford childcare. And adding a $500 tax credit for two-earner families, would help cover the costs of providing care when school is out and both parents are outside the home working.
These proposals, when added to early disclosed proposed policy initiatives, including free community college tuition and a requirement that most employers provide at least seven days of paid sick leave per year will make Tuesday’s State of the Union speech the most ambitious of the Obama presidency.
But it comes with Obama facing a new Republican-led Senate, and a House with a larger majority than in the previous Congress. Both bodies have a substantial number of freshman members who ran on a platform of trimming federal spending and tax reform that will make the tax code simpler, but with no increase in federal revenue. Some of the Republicans campaigned on repealing the estate tax tax that the president proposes to increase for the wealthy.
A White House official said that 99 percent of the costs of the $320 billion in higher taxes and fees over the next 10 years would fall on the wealthiest one percent of Americans.