Obama's Tax Increase on the Middle Class. YES, Increase

[Knowing]

What LK fails to realize is that had the middle class saved more, our consumer based economy would be much worse off. He doesn't realize that consumer spending is the engine that makes this economy move and he wants to kill it.

I suppose if you like credit bubbles and always being in debt to a bank.

 

[WackyDan]

This is why I can occasionally stomach reading slate.

...And there it is... $150k is the new rich. It might be more comfortable in many ways, but it isn't wealthy, and it won't make you rich.

For some, that $150k a year lasts a few years and potentially drops down as well. It would be nice to make $150k with the occasion raise for 20-30 years but that just doesn't happen.

I don't know about you, but I have no problem with the 100k, 200k, 250k earners. I'd like to think that they are smart enough (not all) to save more for retirement, cover their own medical expenses, etc... or at least have the potential to so that the federal gov't and state doesn't have to cover their asses later in life... Meanwhile their higher tax rate pays for a lot of the benefits of the lower middle class and poor anyway... Even in retirement.

 

[WackyDan]

Not everyone I know but a lot of them are, far more than should be. If you talk to them about college savings it just doesn't even enter the equation.

But then again, you're probably one of those fucking losers who isn't, so yes, mr bitch tits, I am better than you. It has nothing to do with being a special snowflake, it has to do with being a fuck of a lot smarter than "DR"Doug. So yeah, go fuck yourself chuckles.

I can probably place decent odds that every lib/prog in this thread saying they have no issue with 529's being taxed because "fuck the rich" don't have a single cent in a 529 for their kids and never would have. None of them plan ahead - the gov't will do that for them.

 

[ivwshane]

I suppose if you like credit bubbles and always being in debt to a bank.

Do you see a correlation?

 

[nickqt]

I can probably place decent odds that every lib/prog in this thread saying they have no issue with 529's being taxed because "fuck the rich" don't have a single cent in a 529 for their kids and never would have. None of them plan ahead - the gov't will do that for them.

I'll tell you what. Find where every lib/prog said they have no issue with 529 income growth being taxed, and that the rich should be f-ed.

I'll wait.

Although, you're going to have a hard time finding what you assume exists, because conservatives don't think ahead of what they say - falling back on their talking points is how they'll backpedal.

Besides a day-old link to how 529s taxation will change, find any analysis to show how much the tax will be, how much it will affect the middle class or anyone use the 529 shelter.

Otherwise, again, this is just more of the tax boogieman coming to get you. Show some numbers, otherwise, all this is, is conjecture about how much it affects anyone.

Taxes go up, taxes go down. You can't explain that.

Well, I can. It's called politics.

 

[WackyDan]

$150k isn't rolling in the dough, but most middle class families aren't sitting on an extra $150k in cash/securities. 529s are great if you have extra money to put into them, but what is the average net worth of a middle class family minus house (-mortgage) and cars (-loans)? To be sitting on $150k in liquidity isn't exactly what I imagine as "middle class", at least over the past 30 years.

Can the tax be assessed somewhere else? Yeah, sure can. And to be honest, I think 529s should be made more expansive so that money spent on day 1 for college/books/tuition/expenses should earn a tax credit, so that people paying for college get a tax cut without first having extra money that most middle class families don't have sitting around.

Colleges that are just plows for turning over students for student loan money should be 1/2 responsible for all outstanding debt. i.e. if graduation rates of an incoming class/% of students is under 50%, they're on the hook and have to stop paying their President the $100k+ salary they all currently enjoy, along with the money spent on things that improve image rather than education/curriculum.

I'm not rich. I've made my mistakes with money and recovered after a long disciplined approach to paying off my debt. I automatically have $100 taken out for my daughter's 529 plan monthly. If I get laid off again, I'll likely have to suspend that or cut back should my pay change significantly. To me a 529 is smart and plenty of people have enough extra each month to contribute something. It is a no brainer today in regard to saving for college and $20 a month even at a lower income isn't going to break the bank. The Utah fund has returned 12% each year the last three years. That is free money today to use towards education and our gov't should leave that the fuck alone if it is serious about education. It means more kids getting the education they want, an education period and potentially less taking on massive debt to begin with... as well defaulting on. Win - Win.

 

[WackyDan]

This is why I can occasionally stomach reading slate.

Quote:
So, yes, Obama wants to tax college savers. But, by and large, they're wealthy college savers. When the Government Accountability Office looked at 529 plans and their less popular cousins, Coverdell accounts, it found that 47 percent of families that had them earned more than $150,000 per year. (Depending on who's measuring, that puts them in at least the top 10 percent of U.S. households.) By comparison, it noted, the median income of families with a student in college is $47,747.

I don't know about you, but I generally don't think that our higher education policy should be geared toward helping families that earned $150,000 or more send their kid to the most expensive possible school. Meanwhile, the White House says that revenue brought in from taxing gains in 529 plans would go toward expanding other higher education tax breaks, such as the American Opportunity Tax Credit, which is available to families earning up to $180,000. So it seems like the middle class makes out just fine in this deal.
__________________

So now we see something different.

That article states that 53% of 529 plan holders are under 150k income. That means that of the 11.8 million 529 accounts some 6.25 MILLION of them are held by the middle class.

And then you have to consider that some are held in the $150k-$250k income range which is upper middle class. So much for some of the claims here.

I'll give it this though...The author of the Slate article has some flawed logic if they can write that they agree with taxing 529's because the rich need to be dinged while ignoring some simple math in their article that over 50% of the accounts are held by the middle class.

 

[ivwshane]

I can probably place decent odds that every lib/prog in this thread saying they have no issue with 529's being taxed because "fuck the rich" don't have a single cent in a 529 for their kids and never would have. None of them plan ahead - the gov't will do that for them.

You probably won't find anyone that sympathizes with you because you constantly shit on everyone else's plight and you always have an excuse why they deserve what they got.


Karma's a bitch

 

[nickqt]

I'm not rich. I've made my mistakes with money and recovered after a long disciplined approach to paying off my debt. I automatically have $100 taken out for my daughter's 529 plan monthly. If I get laid off again, I'll likely have to suspend that or cut back should my pay change significantly. To me a 529 is smart and plenty of people have enough extra each month to contribute something. It is a no brainer today in regard to saving for college and $20 a month even at a lower income isn't going to break the bank. The Utah fund has returned 12% each year the last three years. That is free money today to use towards education and our gov't should leave that the fuck alone if it is serious about education. It means more kids getting the education they want, an education period and potentially less taking on massive debt to begin with... as well defaulting on. Win - Win.

I personally think that 529s plans should continue as-is. I also think that any money that can be shown to have been spent on education should receive tax exempt status, meaning that if you go and buy a textbook for a college course, the money didn't have to sit in a specific fund for any period of time to be tax deductible.

Again, I'm not defending or supporting or cheering on 529 "growth" being taxed. It is entirely unnecessary to do so. But it doesn't change my analysis that this isn't some massive new "middle class" tax increase that is going to smash the middle class (or, what is left of it) into smithereens.

If you can meet me half way and at least acknowledge that I'm not a 529 tax supporter/enemy here, then we're able to actually get past the rhetoric, and agree on what the better/best course of action is.

Also, that you're saving money for your kid's education is a great thing. A whole lot of us never grew up with middle class parents and have had to take out lots of non-dischargeable student loan debt.

Go back to the law that made student loans non-dischargable. I'm against it, because for some reason, someone who accrues 100k in debt buying cars and clothes can declare bankruptcy and get relief, whereas a student who took out 100k in debt to actually improve themselves, and can't pay it back, is just SOL, and will carry that debt forever, minus proving pretty hard criteria to discharge it.

Ass-backwards debt laws, and designed to create an entire class of debt-slaves. Want to talk about stifling the middle class, make it damn near impossible to be in the middle class without higher education, provide loans that can't be discharged if sh-t hits the fan, and watch as you've created a class of workers who can be paid less-than-fairly, with decreasing/no benefits, who can't complain or walk away because then their credit can be destroyed. No wonder people are delaying families, buying homes, and starting businesses.

 

[ivwshane]

The whole reason obama has tax cuts balanced with tax raises is because republicans have been screaming for years that everything needs to be paid for!

Of course, what they meant was that only goodies everyone else wants has to be paid for! Just don't touch their goodies!

Again propaganda works and the OP proves it.

Obama looked at policies that weren't working and decided to cut them to help pay for other, better, more effective policies. Sounds pretty reasonable to me, especially if you are the type to complain about government waste and the debt.

 

[Jhhnn]

So 600,000 families in the middle class currently with 529's can just go fuck themselves apparently.

Someone suggested that if the cuts take 1 dollar out of one pocket and put 2 dollars in the other pocket of the middle class then they see no reason to bitch.

Except that in terms of investment, that extra $2 typically won't automatically be put into college savings now will it?

It is not now. What's your point?

The impact to 529's for those middle class families that have some extra coin to save will be felt not now, but when it comes time to pay for tuition among other expenses. It is funny how you want to wage war against the rich at the expense of 600,000 middle class families because well... They are just a drop in the bucket right?

Do I need to quote Warren buffet as to who's been waging war & who's obviously been winning?

It would be interesting to see just how many of those accounts have token balances, huh?

For that matter, pretty much every investment vehicle the middle class has, the 1% has available as well... So we might as well look at taxing every investment at higher rates due to that alone. Fuck the rich. TO be clear, I have no problem taxing the 1%, but do have a problem with the attitude that it's ok to screw the middle class on something important as college education.

Had to bring in a straw man, huh?

What you're saying is that people who have the economic advantage to use 529's (tax free growth) should also be able to increase their advantage by paying no taxes when they take money out & should also be able to take advantage of a variety of deductions & rebates for money spent on education. That doing well on an already uneven playing field isn't good enough, that making it more uneven is even better.

 

[Blanky]

OP is right. I have no problem increasing tax on the wealthy ($250k+ for example), because they middle and lower classes are getting fucked. This is undeniable fact.

I can't believe so few as 3% use 529s, though. If they stop allowing them to be withdrawn tax free I would absolutely stop using one. They are bullshit enough as it is.

 

[Genx87]

This is why I can occasionally stomach reading slate.

Like I asked before. Who cares if the rich are the ones taking advantage of this program? They were sold on the program by our govt as being tax free. I find it immoral to tell somebody for decades a program will be tax free then turn around and try to tax it. If they have a grandfather clause and designate future contributions as taxable then so be it.

I also find it reprehensible that people are ok with fucking people over because they are deemed to be in a group that can afford to be fucked over.

 

[bshole]

Fuck Obama. Jesus Christ, you have got to be kidding me. I have a 529 for each of my kids. I have been saving for each of them since they were born. So Obama wants to tax that money away so that we can incur debt to pay for college? On what level does that make a lick of sense?

This has got to be just another SOP thrown to the nefarious banking cartels. So because some billionaire bankers want themselves a new leer jet or yacht, the entire middle class is butt-humped again. This is positively the worst thing Obama has proposed in his presidency and I hope to god it goes nowhere.

 

[Doc Savage Fan]

Fuck Obama. Jesus Christ, you have got to be kidding me. I have a 529 for each of my kids. I have been saving for each of them since they were born. So Obama wants to tax that money away so that we can incur debt to pay for college? On what level does that make a lick of sense?

This has got to be just another SOP thrown to the nefarious banking cartels. So because some billionaire bankers want themselves a new leer jet or yacht, the entire middle class is butt-humped again. This is positively the worst thing Obama has proposed in his presidency and I hope to god it goes nowhere.

This is Obama's idea of "helping" the middle class. Waking up and smelling the coffee yet?

 

[bshole]

This is Obama's idea of "helping" the middle class. Waking up and smelling the coffee yet?

Why is he doing this? Is there any support in Congress for this? What the hell am I supposed to do if it passes?

 

[Genx87]

Why is he doing this? Is there any support in Congress for this? What the hell am I supposed to do if it passes?

You saved so you can clearly afford to be taxed. Never mind you were told being proactive for your childrens sake would have a tax benefit when it came time to pay for college.

Anyways this wont get passed. It is designed to rile up the simpletons who didn't plan for their childrens future and want free community college.

 

[fskimospy]

This is Obama's idea of "helping" the middle class. Waking up and smelling the coffee yet?

Wait, are you trying to argue that what he has proposed doesn't overall help the middle class? I find this baffling, as I'm not aware of any objective analysis that says that. Can you provide a source? Or is this the same thing as before where people decide to ignore the beneficial aspects of the plan and only look at the method of paying for it?

If nothing else I wish people would make up their minds. Is Obama a socialist commie-nazi, or is he a tool of the rich and bankers? He really can't be both. (Not to mention the fact that this plan making him a tool of the banks is pretty funny, considering another big part of it is a tax on banks and there's no revenue stream for them that I can discern that would come from ending the 529 tax preference)

 

[fskimospy]

Why is he doing this? Is there any support in Congress for this? What the hell am I supposed to do if it passes?

Aren't you a millionaire? My guess is you will find a way to avoid destitution.

 

[Fox5]

...And there it is... $150k is the new rich. It might be more comfortable in many ways, but it isn't wealthy, and it won't make you rich.

For some, that $150k a year lasts a few years and potentially drops down as well. It would be nice to make $150k with the occasion raise for 20-30 years but that just doesn't happen.

I don't know about you, but I have no problem with the 100k, 200k, 250k earners. I'd like to think that they are smart enough (not all) to save more for retirement, cover their own medical expenses, etc... or at least have the potential to so that the federal gov't and state doesn't have to cover their asses later in life... Meanwhile their higher tax rate pays for a lot of the benefits of the lower middle class and poor anyway... Even in retirement.

Those $150k+ earners = senior doctors, engineers, programmers, and lawyers or small business owners, as well as mid level managers at large companies and government.

 

[bshole]

Aren't you a millionaire? My guess is you will find a way to avoid destitution.

That is all retirement money. Are you suggesting that I incur penalties and risk my retirement to pay for my kids college? I have been saving for both and was on track to nicely cover each, this plan would destroy that plan. Why would you support a tax on 529s? It is clearly a plan that benefits the middle class.

The absolutely terrifying thing about it is that changing the rules midstream may give the government the idea to do the same thing to Roth IRAs. Attacking the most vital resources of the middle class when they need it most, not cool. Makes me want to pull all of my money out and just bury gold in the back yard.

Quit targetting savers. Please.

 

[Genx87]

That is all retirement money. Are you suggesting that I incur penalties and risk my retirement to pay for my kids college? I have been saving for both and was on track to nicely cover each, this plan would destroy that plan. Why would you support a tax on 529s? It is clearly a plan that benefits the middle class.

The absolutely terrifying thing about it is that changing the rules midstream may give the government the idea to do the same thing to Roth IRAs. Attacking the most vital resources of the middle class when they need it most, not cool. Makes me want to pull all of my money out and just bury gold in the back yard.

Quit targetting savers. Please.

That is my concern as well. Im just waiting for them to tax Roth IRAs.

 

[fskimospy]

That is all retirement money. Are you suggesting that I incur penalties and risk my retirement to pay for my kids college? I have been saving for both and was on track to nicely cover each, this plan would destroy that plan.

Your plan would be destroyed if your withdrawals from your 529 plan are taxed as your child's income, which while you are in college is extremely low? Even though another college tuition tax credit is being made permanent that allows tax deductions (with a portion being refundable) of up to $2,500 per year?

Can you explain how your plan is destroyed by this? I'm genuinely confused.

Why would you support a tax on 529s? It is clearly a plan that benefits the middle class.

Because it's not a plan that benefits the middle class very much, and its benefits are heavily skewed towards the upper end. I would actually eliminate all tax preferences for education spending entirely and replace them with education grants to individuals.

The absolutely terrifying thing about it is that changing the rules midstream may give the government the idea to do the same thing to Roth IRAs. Attacking the most vital resources of the middle class when they need it most, not cool.

I do agree that changing the rules midstream is a bad idea, although since there has been no actual legislative proposal around this we have no idea if that would actually be the case.

Makes me want to pull all of my money out and just bury gold in the back yard.

Quit targetting savers. Please.

Considering the performance of gold over the last few years you would probably be well on your way to being destitute under this plan.

 

[glenn1]

Yes, all of those topics should be discussed within the larger context they sit in. It would be like discussing the individual mandate that's part of the ACA without talking about guaranteed issue.

I presume you're aware that Congress has the ability to amend proposed bills so they could remove or change the section in question? Even proposals from the POTUS aren't all-or-nothing propositions which can only be accepted or rejected in their entirety. So therefore it's completely appropriate to discuss this portion of the proposal in isolation. If you want to argue that the bill in its totality is good even with this component that's fine, but it's a hack move to say others have to adopt your approach.

 

[glenn1]

Your plan would be destroyed if your withdrawals from your 529 plan are taxed as your child's income, which while you are in college is extremely low? Even though another college tuition tax credit is being made permanent that allows tax deductions (with a portion being refundable) of up to $2,500 per year?

Can you explain how your plan is destroyed by this? I'm genuinely confused.

I'm presuming you're just being oblivious rather than deceitful. The objection he raised is that he put money into a 529 plan based on the program tax benefits at the time, and Obama is now proposing to change them in the go-forward. Thus people with 529s feel like they were subjected to a bait-and-switch. Obama could have softened the impact by adding a grandfathering provision or exempted a certain existing balance from the plan, but he has done neither that I'm aware of.

Because it's not a plan that benefits the middle class very much, and its benefits are heavily skewed towards the upper end. I would actually eliminate all tax preferences for education spending entirely and replace them with education grants to individuals.

If your objection is truly that "rich" people are too advantaged by this, add a MAGI based phaseout like how Roth IRAs are currently set up. Then you can pinpoint an exact income level where you start fucking people over who you think deserve it, whether it's $150k, 250k, or whatever. Currently the Obama plan makes the number zero.

I do agree that changing the rules midstream is a bad idea, although since there has been no actual legislative proposal around this we have no idea if that would actually be the case.

This is exactly what almost everyone else in the thread has been saying. But evidently you had to come to the rescue of Obama.

Considering the performance of gold over the last few years you would probably be well on your way to being destitute under this plan.

He's saying asset underperformance is still better than relying on the good faith of Obama who might seek to ruin him with taxes as the greedy rich man who is villainized for political points and a source of ready funds for his government spending ideas.