Tax code to increase equality

By | News & Politics
President Obama with potential Presidential candidate Hillary Clinton. Credit@Marc Nozell via Flickr.

President Barack Obama aims to use the State of the Union address to call for increased tax on the wealthy to protect and support the middle classes in the United States. The speech is seen to be a prestigious and important event on the US political calendar and may go some way in shaping President Obama’s legacy and the 2016 presidential election. The President may be expected to call on Congress to simplify the tax code and to increase its equality by financially bolstering the middle classes.

The State of the Union is an address given by the President of the United States, usually annually, to a joint session of the United States Congress. Typically the speech covers the condition of the nation however it is also an important opportunity for the President to set out his legislative agenda which may require cooperation from Congress. The address actually fulfills rules written in the US Constitution in Article 2, Section 3 which requires the President to give Congress information on the “state of the union” and also outline measures he deems expedient.

The proposals might raise as much as $320 billion over the next decade. It is suggested that an increase in Capital Gains tax could fund benefits such as a rise in Child Tax Credit. In doing so, it may help families where both parents work and may also include additional incentives to save for retirement. President Obama is expected to emphasize that he believes, with the US economy growing, it is time for ordinary families to feel the financial benefits. Furthermore there is potential that the proposals may involve the funding of free two-year community college tuition for qualified students. To fund these proposals, as well as a Capital Gains tax increase, the administration is expected to change the current policy that allows capital gains on inherited funds to go untaxed.

According to the Bureau of Labor Statistics, the US economy appears to be strengthening, with the employment rate rising by 1% during 2014. Equally, the United States have begun to produce vast amounts of their own oil supplies leading to reduced importation. Some economists have posited this as part of the reason behind the falling global price due to the extra supply created on the world market. Whilst this may have helped the US economy grow, there is a feeling that there are still financial challenges for the middle classes and it appears that at least one aim of this administration is ensuring the recovery be spread to all income levels within the United States.

As the State of the Union arrives the Obama administration is facing Republican control of both the House of Representatives and the Senate following Republican victories across the country in November’s midterm elections. Although with a strengthening economy President Obama seems emboldened in Iowa during a trip to preview the speech, stating, “America’s resurgence is real, and we’re better positioned than any country on Earth to succeed in the 21st century”. Following recent foreign policy developments such as the reestablishment of relations with Cuba, diplomatic negotiations with Iran, combat missions aimed at Islamic State and the reaction to the Charlie Hebdo events President Obama is expected to speak about these developments in addition to taxation.

With two years left to his term in office, President Obama might be seen to be attempting to strengthen his legacy as a leader of the United States. The simplification of the tax code may be a popular policy although his administration might need to make changes to their proposed policies to make them more acceptable to the Republican controlled Congress.

The 2016 election may be effected by the President’s State of the Union as any policies made in the next few years might lead to the Democratic Party Presidential candidates having to answer questions about them on their campaign. On the other hand, potential Republican candidates may find questions asked of them if the policies are popular and effective. Towards the conclusion of President Obama’s term in office he may find that the freedom from reelection which allows him to follow challenging policies might also shape the topic and nature of the 2016 presidential election campaign.

What productive impacts might the State of the Union address have on the 2016 Presidential Elections?

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