Obama Uses State of the Union to Push for Tax Changes
In his first address before the newly elected Republican Congress, Democratic President Barack Obama advocated for lower taxes on the middle-class and higher taxes on the rich in his annual State of the Union address presented on national television on January 20th.
Calls for Tax Reform
Although many of the President’s proposals were previewed in broad terms by the White House last weekend, the address revealed new details, calling for raising taxes on upper-income Americans and those who have trust funds, income from capital gains and advocated new taxes on a variety of forms of financial transactions. Obama said these taxes should be used in order to fund new programs that Obama claimed would be helpful to middle-class families. Full details of the proposals will be made available in the President’s new budget that will be unveiled in the coming weeks.
Making Childcare a Greater Priority
Obama stressed the need for “helping working families feel more secure in a world of constant change.” He called for measures to make childcare, healthcare, college, housing and retirement more affordable. The President complained that historically Congress has treated childcare as “a side issue, or a women’s issue” and urged Congress to make affordable childcare a “national economic priority.” A $3,000 yearly tax break was suggested as one of the ways to lower the cost of childcare.
Obama attempted to counter those who might criticize his proposals as unaffordable by pointing out recent economic data indicating that the economy has improved notably during the past year. He stressed the contrast between the economic conditions he inherited upon being elected in 2008 and the improved economic conditions of today, improvements which he claims would make his initiatives more affordable than in the past. However, the White House also conceded that the proposals are in conflict with the priorities of most Republicans, who for the first time in Obama’s presidency now control both houses of Congress.
Despite profound political differences between the President and the congressional Republicans, Obama insisted that there are broad areas of bipartisan agreement on certain issues, such as infrastructure improvements and basic scientific research. He also based his arguments upon questions of fairness, saying that every American must pay their fair share of taxes, including the rich. Obama denounced the current tax code as filled with loopholes and special exceptions, including “giveaways the super-rich don’t need, while denying a break to middle-class families who do.”
Attacks Tax Havens
As in last year’s State of the Union speech, Obama urged Congress to discontinue tax breaks that allow companies to escape taxes by shifting their profits to tax havens overseas. He also called for the simplification of the tax code, plus the use of any savings “to help more families pay for childcare and send their kids to college.” The President called for “a tax code that truly helps working Americans trying to get a leg up in the new economy.” As expected, President Obama repeated a proposal first made several weeks ago to provide free tuition to anyone who wants to attend a Community College for two years. He also called for at least one week of guaranteed paid sick leave for all workers.
The President’s speech was not only devoted to domestic affairs, but also addressed the international challenges the nation faces. Obama wants the Congress to give him official authorization to continue to use force against the so-called “Islamic State of Iraq and the Levant” or ISIL, a terrorist nation that has taken over parts of Iraq and Syria. Another international issue discussed by the President was the need to address problems related to climate change, citing the recent agreement between China and the United States to limit emissions of greenhouse gases as an example of success.
As is traditionally done, the President’s State of the Union address was followed by a nationally televised response from a representative of the opposing party. This year the Republican spokesperson was Iowa’s newly elected freshman Senator Joni Ernst. She agreed with the President on the importance of tax reform, but rejected the President’s suggestion that the reforms should include new taxes. While denouncing what she called “America’s outdated and loophole-ridden tax code,” Sen. Ernst called for simplifying the tax code as a means of lowering rates for all income groups. Ernst dismissed the possibility of using any of the resulting savings to “pay for more government spending.”
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Watch the video below to see what I mean.