President proposes tax relief for the middle class in State of the Union.

• Author: Nevius, Alistair M.
• Position: Pres. Barack Obama

President Barack Obama used his State of the Union address to announce that he will propose tax increases for higher-income individuals and provide tax relief for middle-class taxpayers. The White House characterized its proposals as simplifying the Internal Revenue Code, eliminating loopholes, and helping "middle class families get ahead and grow the economy."

Specific proposals on the president's wish list would:

* Eliminate the step-up in basis for assets that are transferred at death, treating transfers at death as realization events for capital gains tax purposes;

* Raise the top tax rate on capital gains and dividends to 28%, which would be imposed on taxpayers with incomes over about $500,000;

* Impose a 7-basis-point fee on the liabilities of large financial institutions to discourage "excessive borrowing";

* Create a $500 second-earner tax credit for families in which both spouses work (5% of the first $10,000 of the lower-earning spouse's income; credit would phase out for couples with incomes between $120,000 and $210,000);

* Modify various child care tax incentives, including increasing the earned income tax credit (EITC) for childless taxpayers, increasing the EITC phaseout...