Wednesday, January 28, 2015

President Obama drops proposal to tax 529 college savings plans

After facing sharp criticism from both Republicans and Democrats, President Obama has decided to drop his proposal to tax withdrawals from 529 college savings accounts. Reports indicate President Obama made the decision to drop the proposal at the urging of senior Democrats including House Minority Leader Nancy Pelosi (D-CA).

“Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President’s broader package of tax relief for childcare and working families, paid for by eliminating the trust fund loophole and making sure the wealthy pay their fair share,” a White House official said on Tuesday.

On Capital Hill, a group of U.S. Senators including Charles Schumer (D-NY), Sherrod Brown (D-OH), Ben Cardin (D-MD.), Bob Casey (D-PA.) and Debbie Stabenow (D-MI) urged President Obama to drop the proposal.

“The President’s plan has the puzzle pieces necessary to bring the middle class back, but this particular piece didn’t fit,” Schumer said.

“I’m glad President Obama has decided to listen to the American people and withdraw his tax hike on college savings. This tax would have hurt middle-class families already struggling to get ahead.

"This is also an opportunity for the president to reconsider his threats to veto common-sense jobs bills, like the Keystone XL pipeline and restoring the 40-hour workweek.

"Together, by listening to the people, we can get our economy moving, create jobs, and help give our children the best opportunities to succeed,” Speaker of the House John Boehner (R-OH) said.

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