Obama's proposed tax on 529 savers hits middle class

"Why is government-dependence rewarded and self-reliance punished"
When trying to "fundamentally transform" a country first you must destroy what makes it work.

my paycheck went up by .89 so now I can get the BMW M3 I always wanted.

DzynKingRTR said:

my paycheck went up by .89 so now I can get the BMW M3 I always wanted.

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A Dinan tune on a 335i is pretty sweet too

Gr8hope said:

"Why is government-dependence rewarded and self-reliance punished"
When trying to "fundamentally transform" a country first you must destroy what makes it work.

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I'm with you man! When you have a person who has been nothing but a community organizer, that's when this
kind of thing (CRAP) happens.

I guess no one should ever have the motivation to excel at anything, because they will end up being punished. So,
just lay back and relax on the couch and smoke dope and don't worry about anything.

Take from those who do and give it to those who don't! Take from those who give and give to those that don't
give.

Bodhi that is what you get for saving. Obama is really going after the middle class, on this one.

Why don't we wait until something is actually proposed before casting aspersions and blame?

seebell said:

Why don't we wait until something is actually proposed before casting aspersions and blame?

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Because the day a Democratic President actually proposes anything OTHER than:
a) this ought to be free for "working families" and
b) the rich ought to pay for it

will be the first time that has ever happened (with the obvious exceptions of all those wars in the 20th century saith Bob Dole).


This is not to say that the Republicans are really any better because they're not. But I chuckle every time I hear Jesse Ventura say that the Democrats are tax and spend (true) and the Republicans are borrow and spend (also true)......and that "with the Democrats, at least it's cash and carry." If that were TRUE then we wouldn't have a deficit under them, but the fact is that we have not had a balanced budget with the "cash and carry" tax and spenders when they were in charge of the whole government since 1969.

In short, both parties promise us "change" and then the Democrats offer another addition to the New Deal (re-FDR the country) and the Republicans offer the second coming of Reagan (and completely ignore the fact that there's a huge difference in reduction of top marginal rates from 70% to 35% than lowering taxes on the wealthy from 39% to 36%......one would think the party of the balanced budget would realize that the economic growth (assuming the supply side theory were true) of a SMALL tax cut would have nothing comparable to that rather large one.


Of course keep in mind that I have watched MSNBC on occasion, and they like to point to the Ronald Reagan "who realized that sometimes you have to raise taxes to deal with the problems." This apparently is the evil twin of the one who ran up a huge deficit with tax cuts at the exact same time.

In short, this speech is being blown up because it's his last "real" State of the Union speech and besides - it is in NOBODY'S best POLITICAL interests to help the lame duck. The Republicans own both houses so good luck getting anything - and I mean anything - passed. Quite frankly - barring a major war - this is his last major address until his "farewell" speech in two more years.

Bamabuzzard said:

I don't see a problem with what Obama's proposing. It's free. He said it was.

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Barack wanted me to share this with you.

• Limit upside-down education savings incentives and consolidate them into a single benefit. The President’s plan would consolidate education savings incentives into one vehicle and redirect the savings into the better targeted AOTC. Specifically, the President’s plan will roll back expanded tax cuts for 529 education savings plans that were enacted in 2001 for new contributions, and – like Chairman Camp’s tax reform plan – repeal tax incentives going forward for the much smaller Coverdell education savings program.

Don't know why we need to rely on "leaked" information from a partisan website. Dive right in and get it straight from the horse's mouth.

http://www.whitehouse.gov/the-press...ax-code-responsibly-invests-middle-class-fami

As Selma says (my paraphrase) Cold day in Hell when the Republicans pass anything proposed by Barack and the Dems.

seebell said:

Barack wanted me to share this with you.

• Limit upside-down education savings incentives and consolidate them into a single benefit. The President’s plan would consolidate education savings incentives into one vehicle and redirect the savings into the better targeted AOTC. Specifically, the President’s plan will roll back expanded tax cuts for 529 education savings plans that were enacted in 2001 for new contributions, and – like Chairman Camp’s tax reform plan – repeal tax incentives going forward for the much smaller Coverdell education savings program.

Don't know why we need to rely on "leaked" information from a partisan website. Dive right in and get it straight from the horse's mouth.

http://www.whitehouse.gov/the-press...ax-code-responsibly-invests-middle-class-fami

As Selma says (my paraphrase) Cold day in Hell when the Republicans pass anything proposed by Barack and the Dems.

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That's true.

But then again - elections have consequences, and they won.

(Maybe when he did the same ole Clinton thing..."hey, we've got 58 votes wrapped up and we don't need any Republicans"....maybe he should have thought that one through. Come to think of it - someone who had been governor of a state with the opposition in control.....someone who ACTUALLY had executive experience....would have known better than to say that).

seebell said:

Don't know why we need to rely on "leaked" information from a partisan website. Dive right in and get it straight from the horse's mouth.

http://www.whitehouse.gov/the-press...ax-code-responsibly-invests-middle-class-fami

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The guy is an arrogant, ignorant punk who knows nothing about much of anything, especially economics. Believing anything that White House has to say is as naive as believing a prostitute in a bordello when she says she really loves you.

As Selma says (my paraphrase) Cold day in Hell when the Republicans pass anything proposed by Barack and the Dems.

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Maybe more accurate to say it will be a cold day when the Community-organizer-in-chief actually proposes anything worth supporting.
His solution to every problem is to give away other peoples' money, expand government control over some aspect of life, play golf and grumpily pout about the racism of anybody who opposed any of his destructive policies.
My Democrat friend said in 2008 that he was an "empty shirt." He was right.

University of Georgia class figures out a plan to balance the budget.
It can be done. Until K Street gets involved.

seebell said:

Barack wanted me to share this with you.

• Limit upside-down education savings incentives and consolidate them into a single benefit. The President’s plan would consolidate education savings incentives into one vehicle and redirect the savings into the better targeted AOTC. Specifically, the President’s plan will roll back expanded tax cuts for 529 education savings plans that were enacted in 2001 for new contributions, and – like Chairman Camp’s tax reform plan – repeal tax incentives going forward for the much smaller Coverdell education savings program.

Don't know why we need to rely on "leaked" information from a partisan website. Dive right in and get it straight from the horse's mouth.

http://www.whitehouse.gov/the-press...ax-code-responsibly-invests-middle-class-fami

As Selma says (my paraphrase) Cold day in Hell when the Republicans pass anything proposed by Barack and the Dems.

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I am usually for taking care of loopholes, but I am not sure this is nearly as benign as the WH is purporting it to be.

http://blogs.wsj.com/totalreturn/20...-college-savings-plans-would-be-cut-by-obama/

Its the fact that they want to bring back double taxation that is annoying. If the government wants to encourage saving money and sending more kids to college, this really does seem as a way to fund people who don't/can't plan well for college expenses at the expense of those who do/can plan well.

WSJ said:

President Obama’s proposal would allow the earnings on new contributions to grow tax-deferred, but treat them as ordinary income when withdrawals for expenses are made. (Earnings on contributions already made are not expected to be part of the proposal.) The same changes would apply to 529 prepaid tuition plans, under the president’s proposal, experts say.


The president is also expected to propose a similar change for Coverdell education savings accounts, which also allow earnings to be withdrawn tax-free for qualified expenses. Coverdells can be used for higher-education expenses as well as for school costs starting from when the child is in kindergarten.

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Now, one important thing that I haven't been able to find out is whether the tax rate is that of the account holder or beneficiary. Most college kids don't make much, and unless its an ivy league school, the tuition costs aren't going to be significant enough to bump them into a high tax bracket. I guess I should caveat that by saying that if college costs continue to rise as they have, its entirely possible that kids may eventually need 40-50k just for a state school in the future.

One thing I can definitely say I do not like is that this seems as if the President is playing a little "I got mine, now I am coming after yours." as it seems he took excellent advantage of the program for his kids.

WSJ Article said:

Investors can currently contribute $14,000 per year per child into 529 plans without triggering gift tax or eating into their lifetime estate- and gift-tax exemption amount . They can also front-load five years’ worth of contributions to the plans. The Obamas took advantage of this perk by contributing $240,000 in total for their two daughters to the plans, according to their 2008 tax returns. The move could have also helped them to lessen possible future taxes on their estate.

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If one looks at this with a critical eye, this sure seems like a loophole that lets the rich transfer wealth. It also seems it is one of those loopholes Obama sure was happy to take advantage of before attempting to close for the rest of us.

I agree that this likely wouldn't get passed, but still. Kinda jerkfaced if you ask me. You can't on one hand preach middle class this and middle class that, and yank one of the few tools that lets middle class families actually pass generational wealth in a manner that is relatively simple to set up. Most wealth transfer of any significance requires an army of lawyers if you don't want to pay a ton of taxes, this was a nice way to help the common middle class family out.

As an aside, do any financial gurus out there know any information on whether this could be a precedent for changing the rules on Roth. I keep hearing that there is so much money in retirement accounts that the government is cranky because its a source of money that they have essentially made too tough for them to tax on a reliable basis. Since they are looking into changing the rules on a 529 (yeah I know its going back to how they were) would something like this make it easier for them to do it to the roth vehicles?

Bodhisattva said:

I look at the money people set aside for the future - for education, for retirement - and say, "That's great. We should have more plans like this so people can take care of their future needs and the needs of their familes. The more self reliance the better."

Liberals look at the money forward-thinking people set aside and say, "Look at that money. It's obvious these people have too much. I want the government to take a big chunk of that." Factor in the disincentive to plan ahead and the pile of money set aside gets considerably smaller. And then virtually everyone becomes dependent on the state; it's just a matter of degree.

Also, we've seen the spiraling cost of higher education in recent years. This is due primarily to the government allowing anyone to get access to cheap money. And the next proposal is to make community college "free"? Can the government not learn any leason? Artificially increasing demand for community college will take something that is very cheap and make it expensive. People like Obama shouldn't be allowed to discuss economics; he's a moron on the subject.

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One thing I haven't seen much talk of is that while he touted that our graduation rates are higher and higher in the SOTU, the kids coming out are increasingly lower and lower skilled/knowledgable due to things like no child left behind. Is this program a way to try and get the workforce up to snuff without actually fixing traditional education and offload workforce training to the taxpayer?

Bodhisattva said:

I look at the money people set aside for the future - for education, for retirement - and say, "That's great. We should have more plans like this so people can take care of their future needs and the needs of their familes. The more self reliance the better."

Liberals look at the money forward-thinking people set aside and say, "Look at that money. It's obvious these people have too much. I want the government to take a big chunk of that." Factor in the disincentive to plan ahead and the pile of money set aside gets considerably smaller. And then virtually everyone becomes dependent on the state; it's just a matter of degree.

Also, we've seen the spiraling cost of higher education in recent years. This is due primarily to the government allowing anyone to get access to cheap money. And the next proposal is to make community college "free"? Can the government not learn any leason? Artificially increasing demand for community college will take something that is very cheap and make it expensive. People like Obama shouldn't be allowed to discuss economics; he's a moron on the subject.

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Let's assume for a moment that 2 years of free community college gets enacted. What would the impact be, if any, on the tuition costs for traditional 4-year institutions?