State of the Union 2015: Barack Obama to call for tax raises on wealthy

President Barack Obama will call for tax increases on the wealthy to help the middle class during his State of the Union address on January 20.

The proposals would raise $320 billion over a decade, to fund benefits such as tax credits.

The speech is the centerpiece of the US political diary and may shape both Barack Obama’s legacy and the 2016 election.

However, the president faces resistance to his proposals, with Republicans controlling both Houses of Congress.

With the US economy growing, President Barack Obama will stress that it is time for ordinary US families to feel the benefits.

According to US officials, who spoke on condition of anonymity, the plans include:

• Closing a loophole allowing the wealthiest Americans to pass on certain assets tax free
• Raising capital gains tax on the richest earners from 23.8% to 28%
• New fees on US financial firms with more than $50 billion in assets

The revenues would rise more than enough to fund the proposed benefits for the middle class, according to the officials.

These include tripling child tax credits, help for families with two working spouses and extra incentives to save for retirement.

The speech is also set to include a plan to expanding free community college education and proposals on cyber-security.

The State of the Union speech will be President Obama’s first since the Republicans seized control of the two Houses of Congress at elections last November.

His proposals have already been dismissed by some in the party.

“Slapping American small businesses, savers, and investors with more tax hikes only negates the benefits of the tax policies that have been successful in helping to expand the economy, promote savings, and create jobs,” Senate Finance Committee Chairman Orrin G Hatch said.

Administration officials hope to find some common ground with their opponents.

They also say the increase in capitals gains taxes, likely to be resisted by many Republicans, returns the rate to what it was under President Ronald Reagan in the 1980s.

[youtube 4eCZX5UJNf8 650]