Republican lawmakers Sunday declared President Obama’s tax plan dead on arrival in Congress, as the president prepared to use the State of the Union address to rally a national TV audience behind tax increases on the wealthy to pay for benefits for middle-class Americans.
“It’s a nonstarter. We are not just one good tax increase away from prosperity in this nation,” Rep. Jason Chaffetz, Utah Republican and chairman of the House Oversight and Government Reform Committee, said on CNN’s “State of the Union.”
Mr. Obama’s plan, which he will detail Tuesday in his speech to Congress and the nation, features a $320 billion tax increase targeting the wealthiest Americans and Wall Street to pay for tax breaks and other goodies for the middle class, such as free tuition at community colleges and an expanded child-care tax credit.
The centerpiece of the proposal is an increase to the capital gains for couples making more than $500,000 per year, boosting the rate to 28 percent, a level not seen since Ronald Reagan was president. The top capital gains rate already jumped under Mr. Obama from 15 percent to the current 23.8 percent, partly to help fund Obamacare.
It also hits wealthy Americans by closing what the administration calls a “trust fund loophole” on inheritance taxes.
The tax-and-spend scheme was never expected to gain traction with the Republican majorities that now control Congress. But Mr. Obama’s populist agenda will force Republicans to defend the wealthy and set up an economic debate infused with class-warfare rhetoric for the 2016 elections, say political analysts.
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Sen. Marco Rubio, Florida Republican, accused Mr. Obama of following an “outdated model” of wealth redistribution.
“The notion, first of all, that in order for some people to do better, someone has to do worse, is just not true. Raising taxes on people that are successful is not going to make people that are struggling more successful,” Mr. Rubio, who is eyeing a 2016 presidential run, said on CBS’ “Face the Nation.”
Mr. Chaffetz said that higher taxes would hurt middle-class families by undermining small business and hampering economic growth.
“We’ve got to make sure that we get a regulatory environment that’s predictable, that we bring those tax rates down and that we quit spending this money that we don’t have,” he said. “More government, a $300-plus billion tax bill from Barack Obama is not the formula for this country to succeed.”
White House adviser Daniel Pfeiffer insisted that the president’s plan was more than a political maneuver ahead of 2016, saying the time was right for addressing economic inequalities in America.
“We are at a place now … where we’ve come back from the crisis, where the American economic is in the best place its been in a long time. So the question is what do we do now to deal with the decadeslong trends of wage stagnation and declining economic mobility,” he said on NBC’s “Meet the Press.”
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“The president has put forward a series of investments and tax relief for the middle paid for by a very simple idea — let the wealthy and the largest financial institution pay a little more,” said Mr. Pfeiffer. “We’re going to make a case for it and were going to see how we do. If Republicans want to oppose closing the trust fund loophole, let them make their case to the country.”