President Obama announces plans to close tax loopholes
President Obama’s plans include raising the top rate of capital gains and dividend tax for high-income households to 28 percent..
Ahead of his State of the Union address later on today, President Obama has put forward plans to amend the tax code by closing “unfair loopholes that are only available to the wealthy and big corporations”.
President Obama’s plans include raising the top rate of capital gains and dividend tax for high-income households to 28 percent. This top rate would apply to couples with incomes of USD500,000 per year or more. The government’s factsheet states that to protect the middle class and small businesses, capital gains of up to USD200,000 per couple could still be bequeathed free of tax and couples would have an additional USD500,000 exemption for personal residences.
The plans also target what the administration calls “the largest capital gains loophole”. Under a provision known as “stepped-up basis”, capital gains on assets held until death are never subject to income taxes – allowing heirs to avoid capital gains tax on large inheritances: “The President’s proposal would close the stepped-up basis loophole by treating bequests and gifts other than to charitable organizations as realization events, like other cases where assets change hands.”
Finally, under the proposals, a fee of seven points on the liabilities of US financial firms with assets of more than USD50 billion would apply – making it more costly for the largest financial firms to finance their activities by borrowing heavily.
According to news reports, Republican lawmakers have indicated that they would oppose the plans.
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