Josh Barro explains the death of Obama's proposed tax on 529 college savings accounts and deplores the dearth of one-percenters:
A ‘Rich’ Person Is Someone Who Makes 50 Percent More Than You
Why Obama’s Proposal for 529s Had No Chance
The first rule of modern tax policy is raise taxes only on the rich. The second rule is that your family isn’t rich, even if you make a lot of money.
President Obama’s State of the Union proposal to end the tax benefits for college savings accounts ran afoul of these rules, which is why he abandoned it, under intense pressure from both political parties, within a week.
Tax-free college savings accounts, like the mortgage interest deduction and the state and local tax deduction, principally benefit people who range from affluent to wealthy. In pushing its proposal, the White House pointed to Federal Reserve data showing that 70 percent of balances in the college accounts were held by families making at least $200,000 a year. In theory, tax reform is supposed to be built around cutting back preferences like these, in order to pay for some combination of lower tax rates and tax preferences aimed at people with lower incomes.
But in practice, politicians from both parties have made a point of holding the group you might call the “merely affluent” harmless from tax increases. If you make $150,000 to $225,000, you make about two to three times the national median income for a married couple. The list of occupations that can get you into this income bracket — government official, academic, lobbyist, journalist — can sometimes make it hard for people in political circles to remember that 92 percent of American married couples make less than $200,000 a year.
So in other words, after all the heated progressive rhetoric about yachts, private jets, offshore accounts, buying the political system with max donations of $32,400 and "one percenters", Obama ran into trouble by trying to tax the "eight percenters" earning over $200 per annum. It's the classic rhetoric-policy mismatch driven by pesky arithmetic - those one-percenters and even five-percenters don't earn enough to pay for all of Obama's proposed free stuff.