Policy Proposal Walkback: Obama Abandons Cuckoo-Bananas Plan to Tax College Savings
Posted: January 28, 2015 Filed under: Education, White House | Tags: American middle class, Barack Obama, Community college, John Boehner, Josh Earnest, Middle class, Savings account, Taxes, The New York Times, United States Leave a comment
Dan Riehl writes: Facing strong opposition from parents and both political parties, Barack Obama is abandoning plans to tax college savings accounts, also called 529s.
In making the announcement, the White House also said it will “keep an expanded tuition tax credit at the center of his college access plan.”
The decision came just hours after Speaker John A. Boehner of Ohio demanded that the proposal be withdrawn from the president’s budget, due out Monday, “for the sake of middle-class families.” But the call for the White House to relent also came from top Democrats, including Representatives Nancy Pelosi of California, the minority leader, and Chris Van Hollen of Maryland, the ranking member of the Budget Committee.
While the WH sought to portray the initial plan as taxing the wealthy to benefit the middle class, analysis indicated that a large number people who are far from “wealthy” were benefiting from the ability to put money away for their children’s higher education without fear of it being taxed.
Both current House Speaker Republican John Boehner and former Speaker Nancy Pelosi came out against Obama’s initial plan. The New York Times reports:
The contretemps over college accounts held broader lessons. For one, tax reform and “simplification” have great appeal in the abstract, but many specific provisions of the tax code have large and vocal constituencies. In addition, Americans’ concept of the middle class is far more elastic than that of economists...read more)
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