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Obama's college savings tax crashes to earth

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  • Obama's college savings tax crashes to earth

    Obama's college savings tax crashes to earth

    Gather around, children, as we tell the story of what happens when a US president tries to take away a cherished middle-class tax break - even one that doesn't really benefit much of the middle class.

    Our tale begins two weeks ago, when President Barack Obama unveiled, as part of his programme to expand an education tax credit and provide two years of free community college for all Americans, a proposal to start taxing earnings of college savings accounts called 529 plans.

    The plans have been popular with many Americans - including the Obamas, who put $240,000 (£158,000) into a 529 plan for their daughters in 2007 - as a preferred way to set aside money for the rapidly growing cost of higher education in the US.

    The programme has existed since the 1980s - first allowing contributors to deduct college savings from their state income taxes and then, starting in 2001, to avoid federal taxes on the growth of funds in the accounts.

    Mr Obama's change was unveiled with relatively little fanfare, as administration officials argued that the 529 programme disproportionately benefitted the wealthy, who could direct more money into the accounts and therefore reap greater tax savings.

    According to the Government Accountability Office, in 2010 only 3% of families used 529 or similar tax-preferred savings plans, and they had 25 times the median financial assets of those who didn't participate.

    If Mr Obama was counting on there to be little uproar over the change, however, he was quite mistaken. Many critics disputed the assertion that the savings plan solely benefitted the wealthy.

    Mary Morris of the College Savings Foundation said that a recent study found that in 2014 10% of 529 accounts belonged to families with income below $50,000 (£33,000) and 70% were from families that made less than $150,000.
    BBC - Full Article

  • #2
    When Democrats joined Republicans en mass over the taxing proposal, he was forced to drop that tax.
    “Breaking News,”

    “Something irrelevant in your life just happened and now we are going to blow it all out of proportion for days to keep you distracted from what's really going on.”

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    • #3
      Another setback for bobo.
      Any man can hold his place when the bands play and women throw flowers; it is when the enemy presses close and metal shears through the ranks that one can acertain which are soldiers, and which are not.

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      • #4
        Originally posted by Daemon of Decay View Post
        With interest rates for savings plans running at near zero, his plan was doomed from the start.

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        • #5
          I'm starting to think Obama isn't real, just a wooden puppet, with sawdust for a brain.
          My worst jump story:
          My 13th jump was on the 13th day of the month, aircraft number 013.
          As recorded on my DA Form 1307 Individual Jump Log.
          No lie.

          ~
          "Everything looks all right. Have a good jump, eh."
          -2 Commando Jumpmaster

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