Obama tax hike would punish middle class

  • 22 January 2015
  • NormanL
Obama tax hike would punish middle class stress

The President's State of the Union address was packed full of promises. And tax increases.  Those were spun as just getting the rich to pay more, but the ugly truth, as our friends at Americans for Tax Reform have noted, is the middle class gets socked, too.

One item that jumped out at us? The proposal to start taxing people who have saved money for college through 529 plans:

Under current law, 529 plans work like Roth IRAs: you put money in, and the money grows tax-free for college. Distributions are tax-free provided they are to pay for college.

Under the Obama plan, earnings growth in a 529 plan would no longer be tax-free. Instead, earnings would face taxation upon withdrawal, even if the withdrawal is to pay for college. This was the law prior to 2001.

As we know, the Obama administration doesn't have much regard for laws as they are written.  In this case, the victims of his plans would be people trying to make a better life for their kids:

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.

Sounds a lot like his promise that people could keep their health care plans if they liked them.