President Barack Obama’s State of the Union address will propose closing multibillion-dollar tax loopholes used by the wealthiest Americans, imposing a fee on big financial firms and then using the revenue to benefit the middle class, senior administration officials said on Saturday.
Mr. Obama’s annual address to a joint session of Congress on Tuesday night will continue his theme of income equality, and the administration is optimistic it will find some bipartisan support in the Republican-dominated House of Representatives and Senate.
Mr. Obama’s proposals call for reforming tax rules on trust funds, which the administration called “the single largest capital gains tax loophole” because it allows assets to be passed down untaxed to heirs of the richest Americans.
They also would raise the capital gains and dividends rates to 28 per cent, the level during the 1980s Republican presidency of Ronald Reagan.
As a way of managing financial risk that could threaten the U.S. economy, Mr. Obama also wants to impose a fee of seven basis points on the liabilities of U.S. financial firms with assets of more than $50 billion, making it more costly for them to borrow heavily.
The State of the Union address is the President’s annual chance to lay out his plans. With Republicans controlling both chambers of Congress after big wins in midterm elections in November, Mr. Obama, a Democrat, faces an uphill task turning much of his vision into legislation.