Obama Plan Reignites Tax Fight - GOP Pans State of the Union Proposal to Boost Inheritance, Capital Gains Levies

WASHINGTON—President Barack Obama ’s plan for billions of dollars in tax increases and higher government spending, to be outlined in Tuesday’s State of the Union address, is reigniting familiar partisan debates about overhauling the tax code and how to best aid the middle class.

The White House views Mr. Obama’s proposals as the start of a broad discussion with the new Republican Congress over a rewrite of the tax code that includes not just corporate but individual taxation, as GOP lawmakers have wanted. But in calling for tax increases, the White House may have complicated negotiations on an issue that both parties recently cited as ripe for compromise.

“This is just another poke in the eye at Republicans, rather than showing a willingness to cooperate,” said Rep. Charles Boustany (R., La.), a member of the tax-writing Ways and Means Committee. “If the president were really interested in tax reform, rather than making political statements, he would have approached Congress and members of the Ways and Means committee in thoughtful ways.”

Mr. Obama surprised Republican leaders when the White House announced over the weekend that he will propose some $320 billion in tax increases over 10 years that are targeted at high-income Americans, and to use that money to pay for $235 billion in tax breaks mostly for moderate-income workers, plus other yet-unspecified initiatives.

The plan would increase taxes on investments held by high-income households by boosting top capital-gains tax rates and imposing capital-gains tax on many inherited assets.

Republicans, who control the House and Senate, have balked at the president’s plan, calling it the type of redistribution of wealth that Mr. Obama has long known Republicans oppose. But like Mr. Obama, Republican congressional leaders, as well as some potential GOP 2016 presidential candidates, have said they want to more directly address the economic anxiety that persists despite a growing economy and falling jobless rate.  Read More at WSJ

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