Obama's Plan To Tax "The Rich"

Ryan Ellis, contributing at Forbes, notes a predictably bizarre proposed Obama tax increase:

Obama's New State Of The Union Tax Hike On Middle Class 529 College Savers

One tax hike in particular was very odd, since it’s aimed almost exclusively at middle class families with kids–the exact demographic the goodies in the tax plan is targeting.

The levy in question would increase taxes on college savings accounts known as “529 plans” (after their section in the Internal Revenue Code). By definition, these accounts are really only used by middle class families. Poorer households don’t have the extra income to save (and even if they have a little, there are much higher priorities like retirement or saving for a home). Very wealthy families might use 529 plans, but it’s far more likely that they have complex trust arrangements set up for their children.

According to the Investment Company Institute (the trade association for the mutual fund industry), there was $245 billion accumulated in 529 plans in 2014. With just south of 12 million accounts open, that means there’s an average balance of about $21,000 in these plans. This is not a mechanism for rich Democrats like the Kennedys or the Gates to shelter wealth.

The tax hike in question - currently, interest, dividends and capital gains from invested assets are not subject to taxes even when withdrawn. Under Obama's proposal, the plan assets can grow tax-deferred but atre subject to taxation upon withdrawal.

As to the notion that plan investors are "middle-class", well, yes but...

A GAO study from December 2012 suggests that these plan investors were basically too rich, too well educated and too white to be deserving of any special treatment from Obama. How rich?

Families with 529 plans or Coverdells typically had much more wealth than families without these accounts, according to our analysis of SCF data. Based on our analysis of the 2010 SCF, we estimate that the median financial asset value for families with 529 plans or Coverdells was about $413,500, which is about twenty-five times the median financial asset value for families without 529 plans or Coverdells (about $15,400). 

For example, families with 529 plans or Coverdells had more retirement assets than other families. Of families with 529 plans or Coverdells, about 94 percent had retirement assets, such as those in 401(k) accounts or traditional pensions. In contrast, approximately 49 percent of families without 529 plans or Coverdells had these retirement assets. Further, the median value of retirement assets was much greater for those with 529 plans or Coverdells. Specifically, the median value in retirement accounts was about $213,600 for families with 529 plans or Coverdells, while the median value for families without 529 plans or Coverdells was about $40,300. A larger share of families with 529 plans or Coverdells (27 percent) also believed they will have more than enough retirement income from pensions and Social Security to maintain current living standards than the share of families without 529 plans or Coverdells (16 percent), which may put them in a better position to save for college.

$400,000 in retirement savings? Obama's agent will make more than that on Barack's big book deal when he finally leaves office. My goodness, Sasha and Malia's agent may make that much.

And income?

Further, the median income of families with 529 plans or Coverdells was about three times the median income of families without these accounts. Specifically, families with 529 plans or Coverdells had median incomes of about $142,400 per year compared to $45,100 for other families.

A full $142,000 per annum? Break out the private jets! Folks with long memories will remember candidate Obama pledging not to raise taxes on families earnng less than $250K, but we are long past the sell-by date with that one.

And I mentioned "too white". For whatever reason, this was a key point in the study:

Also, a larger proportion of respondents in families who had 529 plans or
Coverdells were non-minorities, according to our analysis of SCF data. Specifically, about 84 percent of respondents whose families had 529 plans or Coverdells identified as white (non-Hispanic). In contrast, about 69 percent of respondents in families without these accounts said they were white (non-Hispanic). Moreover, only 5 percent of respondents in families with 529 plans or Coverdells identified as Black/AfricanAmerican, compared to 14 percent without these accounts. While SCF does not provide insight on why more white families use 529 plans than others, a 2010 Sallie Mae study found that a larger percentage of white parents saved for college in general when compared to African-American and Hispanic parents. Further, the study found that white families save more for college even when controlling for income.

White people earn more and save a higher percentage of their income? Then stick it to 'em. As to whether this has a disparate impact on Asians, who are likely to be high savers and college-oriented, well, stick it to them, too.

A summary table was included:

So now a family earning $140K per year is among "the rich" who are over-saving for college and their retirement. Fortunately Barack is here to battle for social justice! And even better, this plan is DOA in the Republican Congress.

BUT THEN AGAIN: Reihan Salam reminds us that these college subsidies often simply subsidize higher tuitions.

Comments

[MarkO]

Pick a number.

[George]

84 percent identified as white (no-Hispanic) leaving aside the white Hispanic George Zimmerman category, isn't the population as a whole close to 80% white?

[NKvirusedand back]

TomM- thanks for running these numbers. They are another data point proving that Obummer is a fullon racialist-- he sticks it to as many white people in as many ways as possible.

[Eric in Boise]

he sticks it to as many white people in as many ways as possible.

I've known that since the 404Care tax on tanning beds.

[Captain Hate]

This is the party of stoopid's idea of showing people they know how to govern:

http://www.washingtonexaminer.com/gop-looks-to-take-a-position-on-climate-change-but-how/article/2558737

[henry]

Your stash is Obama's stash.

[Rob Crawford]

The response should be to stop subsidizing fake diploma mills and start taxing fake fingernails.

[Janet]

Clarice's Pieces is highlighted at Real Clear Politics today!
Congrats, Clarice!!

http://www.realclearpolitics.com/

http://www.americanthinker.com/articles/2015/01/no_room_for_parody.html

[Buckeye]

The missing column in the "summary table" is how many 529 savers vote Democratic and how many vote Republican.

Bet Zero knows.

[Buckeye]

Democrat

I hate autospell

[Ben]

Oh, he lied again. $142k is adjusted gross I assume so we have no idea what amount of income was exempted; $500k or millions.

They certainly don't need an exemption for all college funds as badly as a poverty-stricken $45k with a Piper Cub model airplane on display.

[James D.]

CH, I can't even express how angry that article makes me.

So in the end the GOP is going to just adopt Dem arguments, and Dem policies, regardless of how harmful they are to the economy.

I guess we shouldn't be surprised.

[henry]

CH, that has Jeb fingerprints all over it.

[Threadkiller]

If you like your 529 plan...

[narciso]

Well its the usual clique assortment from the whizzo chocolate
company

[Ben]

Of course private jets aren't in their budget. NetJets is the best they can do for transport, poor dahlinks.

[Buckeye]

Zero sticks it to anyone who isn't a high probability constituent.

Failing to see what the Noble Peace Prize winner is doing for "people of color" much of anywhere.

Nigeria. Fat chance.

George Bush did more for Africans than this guy ever will.

[NKvirusedand back]

True Buckeye, but there is a demonstrable racialist agenda in anything he actualy tries to do. ObummerCare and Stimulus had demonstarble racial agendas. Just despicable.

[Danube on iPad]

If I were thirty years younger, I wouldn't work nearly as hard as I did in 1985. Why bother?

[Iggy]

Why would Barry want people costing the government tax revenues doing what they choose after they graduate when he can steer them to gigantic government student loan debt where they not only have to pay Uncle Scrooge but he can further steer them to the career of Leviathan's choosing as non profit or governmental goldbricks and have it forgiven?

But if you accurately call it a plantation the little lefties squeak and squeal and generally mess themselves.

[Dave (in MA)]

http://boston.cbslocal.com/2015/01/20/police-respond-to-possible-shooting-at-brigham-and-womens-hospital/ A gun-free zone, I'm guessing.

[narciso]

Btw the Houthi outfit is called ansar rasullah, named one of the prophet's followers

[FTL]

Gotta love that disparate impact theory.

The demographics differences in participation just scream "RACISM!"

It could not possibly have anything to do with different cultural/financial habits across different demographics, could it?

Protected classes.

Protected from whom?

[Threadkiller]

So now a family earning $140K per year is among "the rich" who are over-saving for college and their retirement. Fortunately Barack is here to battle for social justice! 

Public employees, including teachers, hardest hit.

http://transparentcalifornia.com/salaries/all/

[rse]

The Climate Change stand is needed because climate change is the rationale for the planned crony economy. They want to have the planning regraded as necessary, not out of greed.

By the way, in the comments to yesterday's post a reader has now created a Not Serfs Yet... bumper sticker. LOL.

[Neo]

The idea of cutting 529 while making community college, basically, free leads me to this possible conclusion.

Malia had trouble getting accepted to the college she wanted and Sasha’s grades are even worse.

This is to get those filthy middle class folks out of the elite schools.
Let them eat community college.

[narciso]

It's brawndo all the way down, or bizarro universe,

[narciso]

Btw jeff duwitz, sic, points out cnn ran a story about no go zones in londonistan, two years ago

[Buckeye]

NK, you are right about the racialist side.

I wonder what kind of mind contortions and compartmentalizing this POS has to go through to deal with being half white. Between that and no daddy, no shocker that the guy is a real mental case.

Will be very interesting to see how he fares after office.

Will he get the kind of speaking engagements Clinton got/gets? Won't be because of his charming personality.

How many friends will he have when he can no longer dole out goodies?

Mooch going to tell him to take a hike?

I think there is a high probability he will be even more miserable than he is now. Sure hoping so.

[narciso]

Sorry dunitz, so the not so hot mayor of paris, was going to sue Fox, that was going to be an interesting discovery phase

[Cecil Turner]

I can just see the WH brainstorming session:

Hey, I've got a great idea! Let's take money from everyone who saved for their kids' education and give it to the ones who didn't . . . what could possibly go wrong?

On the other side . . . need a GOP position statement (with talking points) on climate change? Hey, I'm here to help.

We believe:
1. Climate change is a serious issue, human activity contributes to it, and we're just as sciency as the next guys;
2. Giving government money to scientists studying the issue, third-world governments to cushion the effects, or consultants jetting to IPCC conferences is both a waste of taxpayer monies and counterproductive;
3. Except to promote modernized electrical power generation efforts (read: nuclear and fusion), climate change is not a priority for legislative action.

Never happen, of course. Because, you know, "top men."

[Neo]

Thar she blows!

[Tonto]

Carrying over from the previous gay marriage thread, Stanley Kurtz wrote a thoughtful article on the subject (drawing on the Scandinavian model) over a decade ago in the Weekly Standard. Still a timely read, I think.

[Captain Hate]

Another reason to ignore 404 tonight:

http://www.washingtontimes.com/news/2015/jan/20/obama-has-worst-state-union-record-ford-study-show/

[Man Tran]

With all the higher math discussed last night, I was confused by daddy's discussion of the Brit 'Looney' and the Magnacarta signing being 1000 years ago. Then I figured it was probably the first approximation of New_Pi^2/Old_Pi^2*1000 = time since the signing.

[lyle]

Will be very interesting to see how he fares after office.

He'll clean up financially. If nothing else, EUroweenies will shower him with money and favors even if they're broke.

[narciso]

Wieseltier removes all doubt, now at the Atlantic

[lyle]

"Steal a little and they throw you in jail,
Steal a lot and they make you king."

[narciso]

It's the argument clinic, and more opportunities for the russert whelp to beclown himself

[Dave (in MA)]

So Dingy Harry's office has a painting of a guy who said "Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself."

[Iggy]

"the Russert whelp"

: )

[lyle]

http://www.nationalreview.com/article/396640/loretta-lynchs-secret-docket-ryan-lovelace

Lindsey and Sidney are already licking her shoes.

[Neo]

'Magnacarta signing'

Which one (1215, 1216, 1217 1225 or 1297) ?

[Captain Hate]

Tammy Bruce is reviewing the GOP success stories giving their responses to the 404 SOTU: Jindal, McDonnell who is going to jail, Marco "Gulp" Rubio and Cathy McMorris Rodgers dressed up as Laura Ingall's mother on Little House on the Prairie doing everything but knitting.

Top.
Men.

[Captain Hate]

Trick question, Neo; the Magna Carta was never signed (I just ran across that factoid in a work of fiction).

[narciso]

Yes it's an unimpressive track record, hope Ernst does better.

[narciso]

It's just congi city, never wom the Fa cup

[narciso]

I know your going to be shocked, but michael moore lied again

[Comanche Voter]

Well look--if you are "too white", you're deserving of "special treatment" from Obama--and you can bet you're going to get it--good and hard. It might help to grab your ankles before you get the "treatment".

[Dave (in MA)]

Yeah, how dare Rubio take a drink of water.

[Jack is Back!]

Test

[Jack is Back!]

Was JOM down for a while? Kept gettting a 404 when refreshing. And it ate a post from Seth Mandel at Commentary:

The taxes include an increase in the death tax, proving that Democrats still adhere to Miracle Max’s advice that the only thing to be done with a man who is “all dead” is to “go through his clothes and look for loose change.” It will also include a bank tax that will be passed along to the bank’s customers, as well as a new tax on retirement savings. But the worst among them is probably the tax on education. (Morally speaking, the death tax is probably the “worst,” since organized grave robbing is generally frowned upon in the civilized world. The education taxes are the “worst” from the standpoint of their dishonesty and their burden on those least able to shoulder it.)

[Jack is Back!]

The link to the Commentary article (if it goes through):

https://www.commentarymagazine.com/2015/01/20/robin-hood-improvement/?utm_campaign=twitter&utm_medium=twitter&utm_source=twitter

[Danube on iPad]

The beauty part about all these tax proposals is that if they were enacted, nobody would be noticeably better off, although a number of people would be worse off. But that's the whole idea, isn't it?

Thank God it's all DOA.

[NKvirusedand back]

Good point Dave. The Legacy Media sure forgot about that sip of water when Rubio was a 'statesman' kissing the immigration ass.

[lyle]

Anyone catch the replay of Meghyn interviewing then congressman and solid brass asshole, Anthony Weiner, on why there should even be a death tax last night? What despicable piece of shit he truly is.

[Captain Hate]

Is this the magic bullet we've been waiting for?

http://thehill.com/regulation/legislation/229936-gop-finds-its-secret-weapon

[narciso]

It almostmakes one think we haven't had much of an opposition party, nah

[sbw]

So Dems want a death tax and a "health" system that encourages you to die at 75.

[matt]

The papers are headlining Obama's "aggressive" SOTU address.

The man realizes that Congress is against him and so he is throwing in the kitchen sink. Michelle will be sitting with a poor illegal child, a JuCo destined AA basketball phenom, and a generic poor person with an "I want free Stuff" sign.

In the meantime Obama and his allies have created the greatest disparity in wealth in modern times. The rich got richer and the middle class bore the brunt.

I would suggest that Mia Love do the Republican response.

[narciso]

And crypt keeper ezekiel doesn't think you need an annual checkup to speed things along

[lyle]

I agree with you on Mia Love, matt. But can you just imagine the racist hate and invective EMESSNBC would hurl at her?

[Jack is Back!]

CH,

As with all the "magic bullets" the CRA as approved by Congress needs the Champs signature on the bottom. Fat Chance.

But they need to keep him so busy vetoing he gets wrist cramps and it ruins both his jump shot and his golf game.

[Appalled]

Ben:

Where are you getting:

Oh, he lied again. $142k is adjusted gross I assume so we have no idea what amount of income was exempted; $500k or millions.

I can't find anything non-partisan that puts any meat on this proposal. The Forbes article is not specific.

[Dave (in MA)]

Remember when Michelle Bachmann was too stupid to look at the camera when CNN put their camera off to the side of the Tea Party Express camera?

I wonder what kind of crap they're going to pull on Ernst.

[narciso]

Powerline has an interesting roundup of the Nisman matter

[Captain Hate]

JiB, if that jump shot was any flatter the boys on the sideline would be calling it Twiggy.

[Jack is Back!]

narc,

Thanks for the tip on Powerline and NIsman. Off to school will catch up with that later.

[Iggy]

--Oh, he lied again. $142k is adjusted gross I assume so we have no idea what amount of income was exempted; $500k or millions.--

What part of adjusted gross income is hard to understand? It is only adjusted by the relatively minor ones on the front of the 1040 prior to any schedule A deductions.
Does someone have $1,000,000 in IRS expenses?
Alimony maybe, but an HSA deduction?

[MarkO]

I would like to see someone say the following:

Mr. President. The GOP will seriously consider this tax proposal, if you will agree to sign a bill repealing ObamaCare.

[Miss Marple]

Dave,

One would think by now someone would have hired a media consultant for this avent, someone who could check camera angles, lighting, sound, pro tips like don't drink water while talking, etc.

I never understood why we accept that there is no audience. Why not? Surely they could assemble a few hundred aides and other volunteers to sit in a hall and give appropritate reaction.

[narciso]

These proposals are doa, they have ceased to be, they feed the forest primeval, they are a dead parrot

[NKvirusedand back]

Forget it Iggy, the fool doesn't know what he's babbling about; people with $500K-'millions' in income, are not 529 Plan participants. The simple truth is the people who use the 529 tax break, are not 'rich' in any sense. They work for a living and they are trying to do right by their kids; obviously they are not Obummer constituents, so they get it in the neck.

[Danube on iPad]

And still the American Left clamors for the miracle that is single-payer:

http://www.dailymail.co.uk/health/article-2918003/NHS-forced-abandon-free-healthcare-says-Britain-s-doctor-warns-service-needs-radical-change.html

[narciso]

Gerson points ou that Zaphod was spectacularly wrong in the last xtate of the union, re the wAr,where he went all basil fawlty

[Miss Marple]

Really smart GOP strategy would be to say:

Parents of America! We are NOT going to let the democrats take your child's college savings! We are NOT going to let them rob your children of the family farm or business!

[Captain Hate]

Exactly, Miss Marple; if Joni Ernst would say that it would put things in the proper context.

[jimmyk on iPhone]

"Malia had trouble getting accepted to the college she wanted"

Nah, Sasha would have to be caught standing over a body holding the bloody knife to not get into wherever she applies.

[Captain Hate]

It's almost like they don't believe their own crap:

http://www.breitbart.com/national-security/2015/01/20/1700-private-jets-fly-to-davos-to-discuss-global-warming/

[jimmyk on iPhone]

Or, Malia, rather.

[new lurker]

MM, What's with the Pope?? I thought Catholics loved having babies. It's all very strange to me--what he is saying.

[Captain Hate]

Against all odds, water is still wet:

http://weaselzippers.us/211608-obama-meets-with-top-news-anchors-to-give-them-their-marching-orders-during-pre-sotu-lunch/

[Miss Marple]

new lurker,

I don't get him, probably because I just was more of a Pope Benedict type of person. I am not very fond of the happ-slapp stuff adn the impromptu news conferences, since he manages to say stuff that confuses people.

So I am mostly figuring this is something we have to live through, like the Borgia popes.

[Iggy]

I think MM deserves a stipend from the Vatican for being elected non official spokesperson and chief translator for the new Pope. :)

[lyle]

I know someone linked this:

http://www.washingtonexaminer.com/gop-looks-to-take-a-position-on-climate-change-but-how/article/2558737

But skim it just to get the full meal deal of all The. Top. Men.

I hate these jerks.

[lyle]

Oh, and peruse the comments as well. I think Al Gore is in there...

[matt]

I was with probably the ultimate country club Republican Catholic last night, and his take was rather concerning.

Very mainstream recognize divorce, pro contraception, anti canonization of J Serra. Not real strong on the tenets and philosophy of the faith.

He's a good man, but represents a lot of what the Church in America is going through. Poor moral clarity, inconsistencies, etc.

In others words, what we have been living with for most of the past 2,000 years.

Heard an interview with Dion Di Mucci yesterday as well. Fascinating discussion of his faith journey. He got clean in 1968 or so and went on quite the path of discovery.

[lyle]

Wretchard, quoting a German general and Hitler opponent:

I divide my officers into four groups. There are clever, diligent, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and diligent — their place is the General Staff. The next lot are stupid and lazy — they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the intellectual clarity and the composure necessary for difficult decisions. One must beware of anyone who is stupid and diligent — he must not be entrusted with any responsibility because he will always cause only mischief.

"Stupid and diligent." Remind you of anyone?

[James D.]

MM @ 2:31

Exactly!

Here's my ideal version of what the Republican response to the SotU ought to be tonight:

"The President just spent 75 minutes lying to you in every possible way about every single topic he discussed. And he also made a lot of proposals that are bad policy and harmful to the economy and to your lives.

I could go into detail for 75 more minutes pointing out every lie he told, and every disastrous idea he put forth, but that would just bore you to tears. We've got a website with all the details that you can look at, if you've got the heart for it.

All I'll do is make you a promise. All across the country, you elected Republican majorities to the House and the Senate to stop the President from doing any more damage to our economy, our national security, and our Constitution, and to roll back as much of the damage he's already done as we can. My promise is, we're going to do exactly that, starting now, and every day for the next two years.

Thank you, and good night."

[NKvirusedand back]

CaptH-- You may recall that I urged you to read 'Hondo' in the NY Post this football season (available online). With only 2 games to pick this past weekend, he was in rare form. Here's Hondo's take on Brian Williams' little girl Allison:

Meanwhile, in other NBC-related news, Allison Williams, daughter of news anchor/comedian Brian Williams, engaged in a raunchy sex scene on the season premiere of “Girls,” but she did not violate her no-nudity clause. Apparently, the principled actress’ contract reads: Allison refuses under any circumstances to engage in frontal nudity; however she will consent to be the butt-munchee in a scene if it’ s done tastefully.

[jimmyk]

Getting back to the topic:

Families with 529 plans or Coverdells typically had much more wealth than families without these accounts, according to our analysis of SCF data.

They also typically are much more married with children, and with those children likely to go to college, and have income high enough that they pay income taxes. So it would be rather surprising if they didn't have higher income and more assets than those who don't have 529s.

[narciso]

Justified is back, and it seems the main villain is a variation on the psycho spy, Simon, that michael ran into in the last season of burn notice, played by the same actor

[Miss Marple]

Iggy,

You made a good point! How come Jack never gets these questions? I am not the only Catholic here. LOL!

[Iggy]

I'm going to have to save that Wretchard quote.
One of the truest truisms I've ever read, and it doesn't just apply to armies.

[Peter]

since the Repubs can't think on their feet, they will miss the golden opportunity that is being handed to them by this latest 529 grab, which is the perfect storm of anti-middle class taxation, with the Orwellian claim of being "help" for the middle class.

[NKvirusedand back]

Lyle/Iggy-- I agree; that Vehrmacht General's observation is true about any large organization.

[narciso]

Before hyper cache and the merah case, there was ilan halimi

[narciso]

I was a Catholic for most of my life, and i don't get him either.

[Buckeye]

"You made a good point! How come Jack never gets these questions? I am not the only Catholic here. LOL!"

Because you have broad shoulders Miss Marple:)

And I mean that in only the kindest sense.

[lyle]

Walsh, quoting a Boston Globe lib:

Obama’s slogan “Yes, we can” had come to seem both an acknowledgment of the difficult road ahead, and a savvy rebuttal to the “realists” who ruled out as impossible any actual progress toward peace, justice, or broad prosperity. Early on, the president defied the chorus of naysayers, especially as he pulled the economy back from the brink of catastrophe. His considerable success with health care reform will likely define the core of his legacy.

But six years on, in many important ways, Barack Obama has become a figure of American disappointment, with last week’s inexplicable failure to properly honor the trauma of France only a latest instance of mystifying solecism. Obama’s political and personal enemies never saw him as a force for good, yet by now even many of his once-passionate admirers admit to a profound disenchantment. The shattering of an illusion tied to a figure of such intelligence, deeply rooted liberal purpose, and evident public virtue necessarily involves a further — and perhaps dangerous — disillusionment with democratic will itself.

The horror! (bold mine) Gotta h/t our astute RickB for, inter alia, forecasting this exact phenomenon.