Obama Still Believes in Taxing College Savings Plans
The White House today confirmed the Obama administration still believes in taxing college savings plans:
Question: "So you call this [taxing 529 college savings plans] a distraction. Do you still think this is a good policy? There was so much backlash particularly from middle class Americans who said - we really value these plans, so do you still stand by this as good policy?”
White House spokesman Eric Schultz: “Sure. We do.”The White House also confirmed that the tax hike on 529s will remain in the President’s official budget:
Schultz: "I do want to give you one heads up for your planning which is the 529 piece will still be in the written budget that will be released. The announcement yesterday was made after the book was in the shop to be produced so just for your planning.”
Timeline: Obama Hypocrisy on 529 College Savings Plans
August 3, 2006: As U.S. Senator, votes to make 529s permanent.
2006: Praises 529s in his book, The Audacity of Hope.
2007: Makes a $240,000 contribution to his own 529 accounts.
Sept. 9, 2009: White House Task Force on Middle Class Working Families issues a detailed report on 529s. Top conclusion from the report:
"529 plans are an attractive and convenient means of saving for college.”
The report makes several recommendations on how to further promote 529s.
Sept. 9, 2009: Vice President Biden, Treasury Secretary Geithner, and Education Secretary Arne Duncan share a stage at a Middle Class Task Force event at Syracuse University. Geithner strongly touts 529 plans:
"As the Vice President has said, we are also working to implement, expand or improve a wide array of other government programs that encourage education savings and increase college enrollment. Today I want to highlight one program in particular, Section 529 savings plans.
These plans can be an immensely effective way for Americans to save for college. They are generally administered by the states, and they allow people to put aside money for college and enjoy investment earnings that are free of federal taxes and, in some cases, receive state tax benefits, as well. When state tax benefits are included, a typical middle class family can accumulate 25 percent more in 529 accounts than they can in a typical taxable savings account."
Sept. 9, 2009: Official White House statement praises 529s:
"A 529 plan, offered by states, provides a convenient, tax-preferred way for families to save for college, and works much like ROTH IRAs, wherein contributions are made with after-tax income, returns accumulate tax free and distributions can be for qualified educational expenses without taxes."
July 23, 2010: President Obama sits for a lengthy interview on ABC’s Good Morning America. He was asked, “can you feel the pain directly that other Americans are feeling?” Obama answers by citing his 529s as a example of how he can identify with the middle class:
"Well, part of it has, that part that is devoted to Malia and Sasha's college fund was in a 529, you know, that had been set up when I was still a state senator. And, obviously, that goes up and down with the stock market and so it's lost value like everybody else."
Jan. 17, 2015: On a Saturday evening, the White House shares with reporters an outline of President Obama’s tax plan. The ten-page, single-spaced document describes 529s as “upside-down.”
Jan. 23, 2015: White House Council of Economic Advisers chairman Jason Furman, in an interview with BloombergBusinessweek, deems 529s “ineffective” and “tilted towards the upper end."
Jan. 23, 2015: White House spokesman Josh Earnest dismisses a reporter question on 529s:
"My guess is those who are saying that are critics of the president. And that’s fine. The—I think the facts about the president’s proposal speak for themselves."
Jan. 27, 2015: Anonymous Obama administration official announces that the White House is abandoning its plans to tax 529s.
Obama Praised 529 College Savings Plans in “The Audacity of Hope”
In his 2006 bestseller, The Audacity of Hope, then-Senator Barack Obama praised the tax-free college savings accounts he now seeks to scuttle.
On page 165 — within a chapter titled “Opportunity” — Obama writes:
But no matter how well we do in controlling the spiraling cost of education, we will still need to provide many students and parents with more direct help in meeting college expenses, whether through grants, low-interest loans, tax-free educational savings accounts, or full deductibility of tuition and fees.
One year later, in 2007, Obama took advantage of the opportunity afforded by 529 college savings plans. As first reported by the Wall Street Journal, Obama made a jumbo $240,000 contribution to his own family 529 plans. (View the actual tax form here).
Also in 2006, then-Senator Obama voted to make the current tax treatment of 529 plans permanent.
Fast forward to 2015. On Jan. 17, late on a Saturday night, the Obama administration proposed raising taxes on 529 accounts, criticizing the plans as “upside down.”
The Obama 529 tax hike plan, and arrogant comments to the media -- often from anonymous administration officials -- have since caused a nationwide uproar. And according to the College Savings Foundation:
-"Over a million middle class students are currently enrolled in college and benefiting from 529s."
-"Almost 95 percent of 529 accounts are in households with income below $250,000."
The $250,000 statistic is significant in rebutting Obama administration claims: It is the number President Obama has used repeatedly since 2008 to define "middle class."
As Senator, Obama Voted to Make 529 College Savings Plans Permanent
On August 3, 2006, then-Senator Barack Obama voted to make the current tax treatment of 529 college savings plans permanent.
President Obama’s recently proposed tax plan, however, reverses this vote on 529 plans.
The vote on H.R. 4 — the Pension Protection Act of 2006 — took place in the second session of the 109th Congress, vote #230.
H.R. 4 made permanent the 529 plan expansion in the otherwise temporary 2001 Bush tax cut package (the Economic Growth and Tax Relief Reconciliation Act of 2001 — EGTRRA). The vote for H.R. 4 enshrined into permanent law the current tax-free growth of these college savings plans if used for tuition and fees. The 529 provision was in Section 1304 of the legislation.
Obama Tax Hike on College Savings Plans Breaks Middle Class Tax Pledge
Tonight, in his State of the Union address, President Obama will propose a series of tax increases on the American people. One of these tax increases is indisputably an income tax hike on middle class families with children.
Under Obama’s plan, earnings in “Section 529” (named for its location in the Internal Revenue Code) college savings plans will face full income taxation upon withdrawal.
Under current law, earnings growth in 529 plans is tax-free if account distributions are used to pay for college tuition and fees. The Obama plan will tax earnings in these accounts even if they are used to pay for college tuition and fees.
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. This promise to the American people is documented below:
Speaking in Dover, New Hampshire on Sept. 12, 2008, candidate Obama said:
“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” [Video]
During a nationally televised Vice-Presidential debate in St. Louis on Oct. 3, 2008, candidate Joe Biden said:
“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it’s their capital gains tax, their income tax, investment tax, any tax.” [Transcript]
In an address to a joint session of Congress on Feb. 24, 2009, President Obama restated the promise in forceful terms:
"Rather than raise taxes on middle class families trying to save for their children’s education, Obama should abolish the seven tax increases in Obamacare that directly hit middle-income Americans,” said Grover Norquist, president of Americans for Tax Reform.
Taxpayers Sweep Top Five Ballot Measures
74% – 26% in Georgia – Amendment A: Voters enshrined in the state constitution a cap on the state income tax at the effective rate on January 1, 2015. Therefore the state legislature is now constitutionally prohibited from increasing the state income tax rate any higher.
Farm Workers Facing Forced Unionization Seek Help from Gov. Brown
Today the Center for Worker Freedom (CWF) launched the first in a series of billboards in Sacramento designed to bring attention to Fresno farm workers who are being forced into a union against their will.
Workers at Fresno-based Gerawan Farming voted last November in a decertification election to rid their workplace of the United Farm Workers (UFW). Union bosses at the UFW are trying to take three percent of the workers’ hard-earned pay, despite the fact that the union has negotiated no wages or working conditions for the workers in over twenty years.
But the California Agricultural Labor Relations Board (ALRB) is refusing to count the votes from last fall’s decertification election in an outrageous violation of the Gerawan workers’ constitutional freedoms of speech and assembly.
Writing for Forbes on Labor Day, CWF Executive Director Matt Patterson notes that the California Governor has a unique responsibility - and opportunity - in the Gerawan situation:
For Governor Jerry Brown, who can make the ALRB count the votes, there is an opportunity to restore faith in our democracy to those who have come here seeking its protections.
The CWF digital boards are located on the West side of I-5, just South of Richards Blvd (facing South) and on US 50 half a mile West of Howe Ave (facing East) in Sacramento. They will rotate a variety of messages through September designed to alert Governor Jerry Brown to the plight of the Gerawan workers, while urging him to help them get their votes counted.
The first message (pictured below) shows Silvia Lopez, a Gerawan farm worker, with tape over her mouth labeled “ALRB” and reads: “Freedom of Speech Includes Fresno Farm Workers.”
The second shows a picture of Gov. Brown and asks: “Dear Governor Brown, You Want Your Vote to Count, Why not Theirs? Count the Votes at Gerawan.”
CWF is a special project of Americans for Tax Reform dedicated to educating the public about the costs and consequences of unionization.
Coming to a Friday News Dump Near You: The Obamacare Individual Mandate Tax Form
The IRS recently released a batch of Obamacare-related draft tax forms for the 2014 tax year. Conspicuously absent from this collection is a form to calculate one’s penalty for noncompliance with Obamacare’s individual mandate.
ATR fully expects this draft tax form to be released in a Friday news dump during the dog days of the August recess.
It is clear from the new draft 1040 form already released that every American filing an income tax return will have to attest to their compliance with Obamacare’s individual mandate.
In the “Other Taxes” section of the draft 1040 form, line 61 reads: Health care: individual responsibility (see instructions)
Line 61 is underlined in the graphic below:
The expected Friday-news-dump individual mandate compliance tax form will, at a minimum, contain:
- The name and health insurance identification number of the taxpayer.
- The name and tax identification number of the health insurance company providing the “qualifying” coverage as determined by the federal government.
- The number of months the taxpayer was covered by this insurance plan.
- Whether or not the plan was purchased in one of Obamacare’s “exchanges.
When the draft tax form is finally released, it will be posted here.
Today: Houston City Council Amendments Will Decide Fate of Uber, Lyft
Today, the Houston city council will meet to consider a series of changes to Chapter 46 of the city code that would finally allow ridesharing services to legally operate. Though long overdue, the vote is a significant step forward for a city that earlier this year issued citations to Uber and Lyft drivers as part of a police sting operation.
But threats loom. Some council members bent on shielding the city's entrenched taxi industry have loaded up the meeting agenda with regulation-laden amendments.
As is, the reform package would promote much-needed competition in the Houston transportation marketplace. But the amendments, if passed, would severely kneecap new entrants and only serve to protect existing taxi companies fighting tooth and nail to preserve the status quo.
Click here to continue...
Tom Steyer's Big Attack Ad on Joni Ernst Ruled FALSE. Again.
Left wing billionaire Tom Steyer’s attack ad on Iowa U.S. Senate candidate Joni Ernst has been ruled “FALSE” by Politifact:
It’s back! A claim out of the Democratic Party that numerous fact-checkers debunked in 2010 has made its way to the 2014 Iowa Senate race.
A new ad attacks Republican candidate Joni Ernst, painting her as beholden to special interest groups because she signed a pledge. The ad comes from NextGen Climate Action Committee, a liberal political action committee.
The ad shows a dimly lit room, with two men looking at a picture of Sen. Ted Cruz, R-Texas, on a screen, while laughing in a slow, almost crazed manner. The screen switches to a picture of Ernst.
"We got her to pledge? Joni signed on the line," the ad says. "The tax breaks that thing protects are gold. Green light more outsourcing! China, Mexico. All the way."
Text on the screen says, "Ernst’s Pledge: Protects Tax Breaks for Companies that Ship Jobs Overseas."
Even though the ad is new, this claim -- that a person who signs the Americans for Tax Reform’s pledge is in favor of tax breaks that encourage outsourcing -- is not.
We rate this claim False.
The “ship jobs overseas” claim has been repeatedly and thoroughly debunked (Associated Press: ADWATCH: With campaign ads, don't trust, verify; FactCheck.org: A False Tax Attack) since it first surfaced in 2010.
Steyer’s NextGen Climate Action Committee spent $2.6 million on the ad.
“Billionaire Tom Steyer has been cheated by his political consultants. He should sue them and kick himself in the pants for being a naive rich dilettante taken advantage of by hustlers,” said Grover Norquist, president of Americans for Tax Reform. “His consultants claimed to write an ad attacking Iowa Republican Joni Ernst, but they simply plagiarized TV ads from four years ago that were found to be dishonest then. In school, when you turn in the same poorly researched and plagiarized paper twice, you get an F, Again. ”