Obama outlines tax plan ahead of SOTU

Obama outlines tax plan ahead of SOTU

President Obama will call for higher taxes on the wealthy and large financial institutions in his State of the Union address on Tuesday.

Obama will propose that the $320 billion in tax hikes be used to pay for tax cuts for the middle class, as well as a range of programs, the White House said Saturday.

His plan would generate $320 billion over 10 years by raising the capital gains and dividends rate to 28 percent — the same rate under President Reagan, White House officials point out — on inherited assets, such as trust funds.

The proposal calls for raising the base capital gains rate to 24.2 percent from 20 percent. The 3.8 percent Medicare surcharge pushes that level to 28 percent total, White House officials said, up from 23.8 percent. The plan would affect couples with incomes of at least $500,000 a year.

About $210 billion would be generated from the capital gains changes and $110 billion from adding a new fee on financial firms with more than $50 billion in assets – an estimated 100 companies – that would make it more costly for them to borrow heavily and take on more risk, officials said.

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