One of the many Tax Hikes Obama will propose tonight: Middle Class hike on college savings

[HenryHill9323 65]

Looks like he is breaking his promise to not raise any taxes on anyone making less than $250,000..........again.

 

And why is this idiot offering to pay for 2 years of college for anyone one day, and the next taxing college for the poor and middle class?

 

 

 

Obama Tax Hike on College Savings Plans Breaks Middle Class Tax Pledge

Tonight, in his State of the Union address, President Obama will propose a series of tax increases on the American people. One of these tax increases is indisputably an income tax hike on middle class families with children.

Under Obama’s plan, earnings in “Section 529” (named for its location in the Internal Revenue Code) college savings plans will face full income taxation upon withdrawal.

Under current law, earnings growth in 529 plans is tax-free if account distributions are used to pay for college tuition and fees. The Obama plan will tax earnings in these accounts even if they are used to pay for college tuition and fees.

These accounts are commonly used by middle class families. There are about 12 million 529 accounts open today, and they have an average account balance of approximately $21,000. Most 529 plans permit monthly contributions as low as $25 per month.

This middle class income tax increase is a clear violation of President Obama's “firm pledge” against “any form of tax increase” on any family making less than $250,000. This promise to the American people is documented below:

Speaking in Dover, New Hampshire on Sept. 12, 2008, candidate Obama said:

“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” [

]

During a nationally televised Vice-Presidential debate in St. Louis on Oct. 3, 2008, candidate Joe Biden said:

“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it’s their capital gains tax, their income tax, investment tax, any tax.” [Transcript]

In an address to a joint session of Congress on Feb. 24, 2009, President Obama restated the promise in forceful terms:

“If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.” [Transcript] [

]

"Rather than raise taxes on middle class families trying to save for their children’s education, Obama should abolish the seven tax increases in Obamacare that directly hit middle-income Americans,” said Grover Norquist, president of Americans for Tax Reform.

 

 

https://www.atr.org/obama-tax-hike-college-savings-plans-breaks-middle-class-tax-pledge

 

 

This is where the bored libtards come in to say they won't vote for Obama again.

 

 

.....or bring up BUSH!

[FeelingMN 273]

Yeah, dude seems really inconsistent. He has tried some things to help families/students pay for college. But this flies in the face of that.

[Mungwater 588]

He's going to help the people that didn't save go to college, but let's penalize the folks that planned accordingly.

 

YAY!

[edjr 5,563]

You're not saying, free doesn't mean free?

 

You mean, someone has to actually pay for free stuff?

[NorthernVike 2,080]

Then why would anyone put money into a 529 going forward?

[IGotWorms 3,311]

If true, this is not a good proposal

[edjr 5,563]

Then why would anyone put money into a 529 going forward?

 

If you're okay with 2 years at a community college, sure.

 

I work with all kinds of Lawyers that got their degree from a community college.

[IGotWorms 3,311]

Then why would anyone put money into a 529 going forward?

This is one of the reasons I hesitate to believe the OP. Makes zero sense

[TimmySmith 2,782]

Then why would anyone put money into a 529 going forward?

They wouldn't. But even without adding to the account. every penny earned from here would be taxed and since they cannot withdraw the money without penalty. They are stuck.

 

If true it's not well thought out.

[HenryHill9323 65]

This is one of the reasons I hesitate to believe the OP. Makes zero sense

I know he has a long history of being a lying sack, but you usually buy what he is selling........is Obama a good enough source for ya?

 

Specifically, the President’s plan will roll back expanded tax cuts for 529 education savings plans that were enacted in 2001

http://www.whitehouse.gov/the-press-office/2015/01/17/fact-sheet-simpler-fairer-tax-code-responsibly-invests-middle-class-fami

 

 

Making "zero sense" is a hallmark of Obama's policies.

[FeelingMN 273]

You see, we’ve seen this story before. Prior to the Reagan tax cut in 1981, IRAs were simply ways for people to roll over accumulated pension balances. Then the law was changed to allow almost any worker to save $2000 in an IRA and deduct the contribution from his taxes. Simple and easy. The ICI reports that new IRA contributions shot up from $4.8 billion in 1981 to $28.3 billion in 1982. The new contribution inflows continued to steadily increase throughout the first half of the 1980s.

 

But then in the 1986 Tax Reform Act, Congress changed the once-generous tax treatment of IRAs. The law change muddied the waters, slapping income limits on deductibility (and creating the much more complex “non-deductible IRA” regime). The result was disastrous for savers. Inflows dropped from $38 billion in 1986 to $14 billion in 1987–a reduction of more than 50 percent. The figure continued to drift down from there, only beginning to bottom out when IRA contribution limits were raised in the same EGTRRA law which made 529 plans more attractive.

 

 

The proposed Obama tax hike on 529 plans would do the same thing to these accounts that the 1986 act did to the IRA. Already, it’s difficult for middle class families to find discretionary after tax income for college savings plans. Besides paying the bills and staying out of high interest debt, there are better uses of savings for most families–notably retirement and a down payment for a home. Raising taxes on 529 plans would probably deal a death blow to their widespread use, a kind of anti-savings tipping point.

 

If that was the intention of the proposal, it’s an odd one. The tax code should encourage the neutral treatment of savings. All savings should work like 529 plans–you put in the money after paying taxes, but then your savings never faces taxation again. Raising taxes on the middle class is both bad politics and bad tax policy, and this tax hike should remain dead on arrival.

http://www.forbes.com/sites/ryanellis/2015/01/19/obamas-new-state-of-the-union-tax-hike-on-middle-class-529-college-savers/2/

[Patriotsfatboy1 1,432]

He wants people to invest in the AOTC and not Coverdell and 529 plans moving forward.

 

I am not sure how many of you have 529's and for how long, but the 529 savings advantages were tenuous before they were renewed a few years back.

[Patriotsfatboy1 1,432]

http://www.forbes.com/sites/ryanellis/2015/01/19/obamas-new-state-of-the-union-tax-hike-on-middle-class-529-college-savers/2/

Just so that you know, it is the same dude in the OP (Ryan Ellis).

[edjr 5,563]

He wants people to invest in the AOTC and not Coverdell and 529 plans moving forward.

 

I am not sure how many of you have 529's and for how long, but the 529 savings advantages were tenuous before they were renewed a few years back.

 

I do, for the next 16 1/2 years.

[Patriotsfatboy1 1,432]

I do, for the next 16 1/2 years.

There will be other options that come into effect even after the AOTC. I have a feeling Congress will push back on the changes to the 529 plans. People who want to get elected will need to understand that there are plenty of people who don't want that part changed. Even pandering to the poor with thoughts of free education if you work for it will blow up in Democrats' faces. There are so many other issues that need to be addressed first and our problem is a spending one, not a revenue one.

[Mungwater 588]

The free college is a bad idea, that's going to hurt the stripper industry

[KSB2424 3,083]

He wants people to invest in the AOTC and not Coverdell and 529 plans moving forward.

 

I am not sure how many of you have 529's and for how long, but the 529 savings advantages were tenuous before they were renewed a few years back.

 

Should the president’s proposal go into effect, the change wouldn’t be brand-new. When 529 plans launched in the 1990s, earnings withdrawn from the plans were taxed as ordinary income. The Economic Growth and Tax Relief Reconciliation Act that was signed into law in 2001 provided a temporary change to their tax treatment—which became permanent in 2006. The new tax treatment was a game changer for 529 plans, which then saw a spike in parent contributions. Some 12 million 529 savings and prepaid accounts existed as of mid-2014 with a total $244 billion in assets, according to the latest data by the CSPN.

 

This will pretty mich be the death nail to 529's and Coverdells.

[KSB2424 3,083]

Doesn't this all go back to Capital Gains Taxes and the theory, thoughts, and arguements about taxing it and how much?

[RLLD 3,455]

You're not saying, free doesn't mean free?

 

You mean, someone has to actually pay for free stuff?

 

I will admit that the doctrine of "free" seems to be a Democrat-focused notion, and no, nothing is ever free, someone eventually has to pay for it. Unless you are a bank, then you get tons of tax breaks and bailed out when you make por financial decisions, while you crush the people who bailed you out.....

[KSB2424 3,083]

But....

 

including a new tax break for two-earner families and a tripling of the child care tax credit.

 

Why is there a tax break needed for two-earner families and a tripling, yes tripling kids in daycare? There is absolutely nothing wrong with either, but are we really rewarding people for having others raise their kids? Seems weird.

 

Maybe that's just me.

[RLLD 3,455]

But....

 

 

Why is there a tax break needed for two-earner families and a tripling, yes tripling kids in daycare? There is absolutely nothing wrong with either, but are we really rewarding people for having others raise their kids? Seems weird.

 

Maybe that's just me.

 

Perhaps the thought was that a tax break for two earner fammiles might result in some kind of economic improvement that will result in them eventually becoming a single earner family? Not sure, it sure seems counterintuitive....and the tripling of the day care thing will certainly help young families, not sure but it should also help young families.... even if it seems like its enabling, i doubt anyone really wants to leave their kid at day care.

[KSB2424 3,083]

It's as if we are giving breaks to the two earner families, living in McMansions, having their kids raised by strangers, and NOT saving for college.

 

Then taxing and disenfranchising more traditional families, who sacrafice money to try and mantain quality home/family values and actually save for college.

 

Is that not backwards? Or is it just me?

[KSB2424 3,083]

 

and the tripling of the day care thing will certainly help young families, not sure but it should also help young families.... even if it seems like its enabling, i doubt anyone really wants to leave their kid at day care.

 

Not trying to get into a "daycare is bad" arguement. My family has done both. Used a daycare and my wife stay at home. So I've been on both sides of that fence. However many families sacrafice money, McMansions, vacations, having a big screen LED in every room so a spouse can stay at home. I don't like giving a tax break to a family JUST because they have dual incomes.

[RLLD 3,455]

He is also going after the capital gains loopholes. I am not sure the government should ever tax inheritance, i think that is garbage, but I also understand that they can make a ton of money if they do. The repubs think its unreasonable, the democrats think not taxing it is unfair, both are wrong and both are right.

[RLLD 3,455]

 

Not trying to get into a "daycare is bad" arguement. My family has done both. Used a daycare and my wife stay at home. So I've been on both sides of that fence. However many families sacrafice money, McMansions, vacations, having a big screen LED in every room so a spouse can stay at home. I don't like giving a tax break to a family JUST because they have dual incomes.

 

[peenie 1,690]

If true, this is not a good proposal

 

I hope it's not true...

[IGotWorms 3,311]

But....

 

 

Why is there a tax break needed for two-earner families and a tripling, yes tripling kids in daycare? There is absolutely nothing wrong with either, but are we really rewarding people for having others raise their kids? Seems weird.

 

Maybe that's just me.

The present issue is that for some families it makes financial sense to keep one parent out of the workforce because the gain from both parents working is minimal after factoring in more taxes and childcare expenses.

 

So the point is to grow the workforce by providing a financial incentive for both parents to work.

 

Is that good policy? Well that I can't tell you - I imagine there would be overall economic benefits but also less kids with the benefit of a stay-at-home parent.

[HenryHill9323 65]

He is also going after the capital gains loopholes. I am not sure the government should ever tax inheritance, i think that is garbage, but I also understand that they can make a ton of money if they do. The repubs think its unreasonable, the democrats think not taxing it is unfair, both are wrong and both are right.

Inheritance taxes are complete bullshiot. That money has been taxed while it was being earned.

 

People have to sell off farms/businesses to pay a tax bill just because someone died. BS.

[IGotWorms 3,311]

 

I hope it's not true...

Well if the purpose is to kill 529s in favor of some alternative, we have to properly evaluate the alternative before deciding if its a good plan or not. 529s are flawed as they are so a better path certainly seems possible

[RLLD 3,455]

The present issue is that for some families it makes financial sense to keep one parent out of the workforce because the gain from both parents working is minimal after factoring in more taxes and childcare expenses.

 

So the point is to grow the workforce by providing a financial incentive for both parents to work.

 

Is that good policy? Well that I can't tell you - I imagine there would be overall economic benefits but also less kids with the benefit of a stay-at-home parent.

 

yeah, that makes sense. When we had our first kid the decision was based on wanting mom to be home with the kid, so financially it required some changes and gyrations to arrive at the right financial decisions, but i can also see where one might look at daycare and other costs and decide that it would be better to have mom stay home as a purely financial decision.

[IGotWorms 3,311]

Inheritance taxes are complete bullshiot. That money has been taxed while it was being earned.

 

People have to sell off farms/businesses to pay a tax bill just because someone died. BS.

To me inheritance is the absolute best thing to tax - a person does Jack focking sh!t to earn it. And the guy who DID earn it is dead

 

Seems to me I'd much rather tax that then income a person actually earns through their labor

[RLLD 3,455]

Inheritance taxes are complete bullshiot. That money has been taxed while it was being earned.

 

People have to sell off farms/businesses to pay a tax bill just because someone died. BS.

 

Yes and no.

 

I can see where your grandfather may have invested money and made money on it over time, those earnings should be taxed at some point, i get that.....

 

But I think that the movement of money from relative to relative needs to be left alone, I do agree that taxing that movement is ridiculous.

 

The government needs to lower spending before it touches that

[HenryHill9323 65]

To me inheritance is the absolute best thing to tax - a person does Jack focking sh!t to earn it. And the guy who DID earn it is dead

 

Seems to me I'd much rather tax that then income a person actually earns through their labor

So, just because someone dies you think the govt should take half of what he has worked for his entire life instead of him having control over where it goes.

 

Dayum dude, you actually think Govt knows better how to run your life than you do. What a shame.

[RLLD 3,455]

To me inheritance is the absolute best thing to tax - a person does Jack focking sh!t to earn it. And the guy who DID earn it is dead

 

Seems to me I'd much rather tax that then income a person actually earns through their labor

 

I would tend to disagree, but i do understand your point, not that what your saying is invalid, i just do not agree....

[KSB2424 3,083]

Isn't the Estate Tax / Inheritance tax at a threshold over like either 250k or maybe even higher or somethign, so it's just the "Rich"?

[HenryHill9323 65]

Isn't the Estate Tax / Inheritance tax at a threshold over like either 250k or maybe even higher or somethign, so it's just the "Rich"?

So?

 

If it is wrong, it is wrong. And it is wrong.

[IGotWorms 3,311]

So, just because someone dies you think the govt should take half of what he has worked for his entire life instead of him having control over where it goes.

 

Dayum dude, you actually think Govt knows better how to run your life than you do. What a shame.

Well no, that's not true at all. I'm saying we have to tax something and as a value judgment I think it's better to tax unearned income (such as inheritances) rather than income earned through efforts and labor

[KSB2424 3,083]

It appears tax and the tax code are going to a big topic in the State of the Union and prolly in 2015.

 

I'm going to put spending aside as I think even moderate Democrats agree we HAVE to get that under control first. Obama really needs to address that side of the ledger more instead of focusing most all his attention to the revenue side.

 

But regarding Taxes. For me Taxes aren't such a bad thing that people complain and whine about. The true sense of taxes make sense and are good. It's a pot of money that everyone puts in for the betterment of the community. Who doesn't like nice roads, bridges, infrastructure, good schools, parks and recreation, Fireman / Police / EMS and yes some safety nets for the less fortunate. All that is trememdous.

 

And yes, even alot of Repbulicans are okay with a tax system where the rich pay most, the middle class pays some, and the poor pay little if any.However alot of really left leaning Democrats take THAT to extremes.

 

And both parties try to push behaivor through a tax code. Credits for this, and deductions for that, and tax breaks for buying a "green" energy appliance or for having a kid in daycare. So and so forth. Over the years its become rather ridiculous. Stop trying to push behaivor as you see fit through a tax code. It only creates loopholes and cheaters and its dumb. Simplify for crying out loud.

 

/rant

[NorthernVike 2,080]

How long before the fockchops in Washington decide to kill the ROTH IRA and tax them too?

[RLLD 3,455]

How long before the fockchops in Washington decide to kill the ROTH IRA and tax them too?

 

I think it depends on whether or not it impacts congress, we already know very well that they will exempt themselves from suffering under the onerous rules they like to create, such as healthcare etc.....