Hocus POTUS

20 January 2015 By Daniel Indiviglio

It’s hard to argue against the U.S. president’s proposal to close a big capital gains loophole. And measures to encourage work and savings make sense. But more college subsidies heighten an already big financial risk and a tax on big bank borrowing brings the wrong incentives.

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U.S. President Barack Obama will deliver his annual State of the Union address on the evening of Jan. 20. In addition to pitching a number of programs that will cost the federal government money, he will also propose a series of new taxes and credits, the White House has said.

Some of the president’s proposals center on tweaking the capital gains tax. He wants to hike the tax for Americans who earn more than $500,000 per year to 28 percent from 23.8 percent. He also wants assets provided to heirs through inheritance to attract tax on the gains between purchase and their owners’ death, a period currently exempted.

The president is also seeking to help students by providing up to $2,500 per year in college education tax benefits. He would also expand the child care credit for up to $3,000 per child.

He is also proposing a new $500 credit for two-earner households, as well as an expansion of the earned-income credit for workers with and without children. Obama has also suggested a seven basis-point levy on the liabilities of banks with more than $50 billion in assets.

Obama would also like Americans without access to an employer-administered savings program to be automatically enrolled in a retirement plan.

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