By Gabriel Tebow, Arts & Community Writer
Bailey Lake, Graphic Designer
President Barack Obama recently proposed new tax reforms intended to help middle-class America. The United States’ tax laws are currently riddled with loopholes that only the very rich can access. Because of this, middle-class citizens bear a heavier burden from taxes. In his State of the Union Address, Obama stated that both parties need to “work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs here at home.”
The President also released a fact sheet, through the Press Secretary, that outlines “a simpler, fairer tax code that responsibly invests in middle-class…” The fact sheet is split into two sections: preventing the wealthy from using loopholes to avoid paying their fair share of taxes and helping the middle-class thrive financially. Currently the tax code allows typically wealthy families to hold money in the form of trust funds. Many people take advantage of this, and each year, hundreds of billions of dollars escape taxation. In the future, this will New Tax Reform Helps Low-Income mainly impact the upper one percent of the Nation. It will prevent the very wealthy from accumulating more tax-free wealth.
Next, Obama wants to increase the total capital gain and dividend rates up to 28% for high-income households. Total capital gain and dividend rates have not been this high since President Ronald Reagan was in office in the 1980s.
Lastly, Obama wants Congress to increase the borrowing rate for large companies that rely on excessive borrowing. This would cause large companies “to make decisions more consistent with the economy-wide effects of their actions,” and help prevent defaults that preciously aided the recession and caused the bad economy. The proposal will increase revenue for the Nation and could be used to increase funding for education, Social Security, and other important programs. It will also protect the middle-class and small-business owners from taking the brunt of the tax responsibility in this nation.
Obama claims that he is not only working to close loopholes for the rich, but that he is also helping the middle-class become stronger by making it easier to care for their children, educate their children, and save for retirement. Two-earner families, families in which both parents work, could receive tax cuts and tax credits that would improve the whole family’s life and wellbeing. Two-earner families could receive $500 in tax credits and $3000 of tax cuts for each child in the family. This would give the middle-class more money to invest and save, and help them to send their children to college.
Furthermore, Obama asked Congress to make saving for retirement easier for middle-class workers by allowing 30 million workers to save for retirement with their employers. The president is also proposing that Congress provide students with, “up to $2,500 each year over five years as they work toward a college degree.” Another proposal is to make two years of community college free for students willing to work for it. This would reduce the tax burden on middle-class families while giving them better opportunities to thrive in this nation.
Obama says that he wants to “help every hardworking kid go to college and succeed when they get to campus.” The claim is that these tax reforms will greatly help students.
Also, if students have jobs and make under $60,000, they can file their taxes for free by using the new IRS approved filing software available at filefree.irs.gov. According to the IRS’s media contact, David Tucker, this new program will help millions “to file a federal income tax return for free,” and help save the middle-class as a whole an estimated $1.3 billion. In the State of the Union Address, Obama stated, “we’re shaking up our system of higher education to give parents more information, and colleges more incentives to offer better value, so that no middle-class kid is priced out of a college education.”