Obama’s ‘Middle-Class Economics’

Obama’s ‘Middle-Class Economics’ 
He proposes to tax savings plans that parents create for their children’s college education. 

By Ashley Pratte

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The million-dollar phrase used by President Obama in his State of the Union address last week was “middle-class economics.” What he didn’t explain is that his middle-class economics doesn’t actually help the middle class – it hurts them. 

The latest war on the middle class comes with the taxing of 529 college savings plans – which currently grow tax-free. They are very popular among middle-class families who are trying to responsibly save for their children’s college tuition. 

The White House has proposed taxing these plans as a way to “simplify the tax code.” How nice of our president to tax families responsibly saving, a move that would inevitably take away opportunities for their children. I guess that’s the definition of Obama’s middle-class economics. He did say that “an America built to last insists on responsibility from everybody.”
The Obama administration apparently believes that this tax would somehow redirect more money to middle-class families. Families that are fortunate and responsible enough to stow away money for their children’s education deserve better. This is yet another broken promise from the Obama administration. More than 7 million families have saved money in 529 savings plans, believing that the future earnings on those plans would not be taxed and that they would receive tax cuts in their respective states. Obama’s proposal would directly hurt these families by taxing their savings as income, when they are already sacrificing to save. 

The president himself has two daughters; he and the first lady have been putting away savings in 529 plans. It is important to note that they currently have $240,000 in their plans after front-loading five years’ worth of contributions back in 2007. The average balance in these 529 savings plans is $21,000 – a far cry from the president’s. This goes to show just how much the average family will struggle to make future contributions if they are taxed. 

The most disappointing aspect of all this is that President Obama took the opportunity in his speech to propose his “free” community-college plan. The idea sounds nice, especially now, when college is unaffordable for many young people and requires that many who do attend take out significant loans. But is a “free” government program actually void of costs? Of course not. The taxpayer – including parents saving for their children’s futures – will front the costs for this massive government program.

Interesting how Obama spent so much time discussing his wonderful new “free” community-college plan and so little, if any, explaining the new taxes that would be implemented to pay for his expansive government programs. Clearly the president knows that the proposal to tax 529 college savings plans would be widely unpopular. Otherwise he would have addressed it. If he did some research he would find that 70 percent  of account holders have incomes under $150,000 – these plans are not benefiting the rich but providing help for the middle class. If Obama truly wants to help the middle class, he should consider the millions of middle-class families who contribute their hard-earned dollars into these plans. 

Obama would make it near impossible for average Americans to save for their futures, but maybe that is his plan. According to him, all should have a fair shot and pay their fair share, but people whose savings result from considerable personal sacrifice for their children have reason to consider the taxation of those savings unfair. Overall, this tax is just bad policy and more than likely will not pass Congress. Regardless, it is important to expose what this president is seeking to do under the guise of helping the middle class.

— Ashley Pratte is the spokeswoman for Young America’s Foundation.

http://www.nationalreview.com/article/397077/obamas-middle-class-economics-ashley-pratt
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