It happened just one week after President Obama’s State of the Union address. I have to ask, who is advising the President? Just one week after his State of the Union address, Barack Obama was pushing $320 billion in new taxes to fund several new “free” programs. I remember one of the great sayings during my military career came from General James D. Thurman: “there is no free chicken.” So in that same vein, President Obama hoped to dump the burden of paying for the “free” stuff on a select group of Americans.
However, one of those tax increases ran into a little trouble.
As reported by Fox News, “President Obama has dropped his plan to end tax breaks for popular college savings accounts known as 529s. The decision comes in the wake of stern criticism from Republicans and pleas from top Democrats, including House Minority Leader Nancy Pelosi, to drop the plan.”
“The 529s, which allow college savings to grow tax-free, mostly are used by upper-middle- and middle-class families. Low-income families typically don’t have thousands of dollars saved up for college, while very wealthy families are more likely to have trust funds in place for their children’s education.”
“Administration officials had claimed last week that they were going after the 529 accounts because they unfairly benefit high-income people. Under the proposed change, Americans eventually would have had to pay taxes on the earnings when they were withdrawn.”
Now the obvious question is why did President Obama stand up last week and deliver a policy proposal that even his own House Minority Leader didn’t support? It shows again a president not just out of step with America, but indeed with his own party. Even Democrats were uncomfortable with Obama’s proposal and lobbied for him to ditch the plan. Rep. Chris Van Hollen, D-Md., the ranking Democrat on the House budget committee who never met a tax hike he didn’t like, was against the 529 tax plan.
And with all the baloney rhetoric about “middle class economics” he clearly doesn’t understand how middle-income Americans provide opportunity for their future generations. Then again, perhaps Obama doesn’t want better education opportunities for the children of middle-income families?
Fox says, “According to the Investment Company Institute, there are close to 12 million 529 accounts open, with an average balance of $21,000. In all, Americans accumulated $245 billion in 529 plans in 2014.”
“A White House official told Fox News late Tuesday afternoon that the 529 provision was a “very small component” of Obama’s plan to cut taxes for the middle class. “Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President’s broader package of tax relief for childcare and working families,” the official said. Earlier Tuesday, House Speaker John Boehner called on Obama to drop his plan, and highlighted new legislation that he said would protect and expand on the 529s. In a statement, he applauded Obama’s decision. “I’m glad President Obama has decided to listen to the American people and withdraw his tax hike on college savings,” Boehner said. “This tax would have hurt middle-class families already struggling to get ahead.”
Now, I would tend to believe, if the 529 was a “small component,” why was it included in the first place? And once again, who on the Obama policy staff reviewed this and thought it would fly?
My assessment is that Team Obama felt they could sneak one by the American people. Once caught, they seem to be saying “my bad, not a big deal anyways”. Maybe the hidden agenda was to raise taxes on 529 plans and in the end force more Americans into his “free community college” scheme — or even better to depend upon more government student loans.
And of course we all know how great that’s working out for young Americans graduating from college into a job market that, well, ain’t exactly great. As a matter of fact, if you were watching the confirmation hearing for the new Attorney General, you heard her state that she illegals in America should have exactly the same rights as citizens in having a job — so much for her enforcing our rule of law.
Ok, let’s be honest, it’s all George W. Bush’s fault, because “tax-free 529 accounts were introduced as part of then-President George W. Bush’s 2001 tax-cut package. The 529 college savings plans, which are named after the Internal Revenue Service code that created them, are among the most popular ways for families to save for college. The move to strip 529s of the key tax break would have allowed the administration to offset the cost of other changes, including an expansion of the American Opportunity Tax Credit, which provides tax relief for higher-education expenses of up to $2,500 per student. The president also is pushing a costly program to provide two years of free community college to students who keep up their grades” — hmm, a 2.5 GPA.
Now, let’s examine Obama education policy theory. The objective, as part of “middle class economics”, was to tax middle-income families who are privately saving and investing in college education for their children in order to pay for free community college education for those who are not saving?
So the logic is to punish those who are taking the initiative to take responsibility for providing better opportunities for their children. However, from the Obama perspective, taking initiative is a bad thing, so the progressive socialist approach is to punish the individual for the sake of the collective — so what’s the incentive? Answer? There is no incentive. Why work when you can sit at home and draw government benefits?
This little reversal will pass and any interest won’t last past a 48-hour news cycle. But, if you can just take a moment to ponder this failed scheme, it reflects the disdain Obama and his ilk have for the ability of we the people to improve our lot — without government intrusion.
It was an attempt to say you need us, you can’t do this yourself and we won’t allow you advantages not blessed by us, the new progressive politburo — the political patrician class. Our definition of “middle class economics” lends itself to our interpretation of fairness, fair share, and shared wealth — even that which has been accumulated, saved, and invested for the purpose of advancing the American Dream.
Obama’s desire to tax 529 college savings plans sends a clear message as to the heart and soul of the most progressive, leftist, socialist president America will ever know…unless we’re foolish enough to allow Alinsky acolyte Hillary Clinton, populist socialist Elizabeth Warren, or radical La Raza baby Julian Castro to occupy 1600 Pennsylvania Avenue.