Obama to Drop Proposal to End ‘529’ College Savings Plans
Source: NYTimes
WASHINGTON — President Obama, facing angry reprisals from parents and from lawmakers of both parties, will drop his proposal to end popular college savings accounts known as 529s, but will keep an expanded tuition tax credit at the center of his college access plan, the White House said Tuesday.
The decision came just hours after House Speaker John A. Boehner of Ohio demanded the proposal be withdrawn from the president’s budget, due out Monday, “for the sake of middle-class families.” But the call for the White House to relent also came from top Democrats, including Representatives Nancy Pelosi of California, the minority leader, and Chris Van Hollen of Maryland, the ranking member of the Budget Committee.
Ms. Pelosi pressed the case to senior administration officials on board Air Force One as she flew with the president from India to Saudi Arabia, according to Democratic aides familiar with the discussions.
“Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President’s broader package of tax relief for child care and working families,” a White House official said.
Read more: http://www.nytimes.com/2015/01/28/us/politics/obama-will-drop-proposal-to-end-529-college-savings-plans.html?rref=politics&module=Ribbon&version=context®ion=Header&action=click&contentCollection=Politics&pgtype=article
Looks like someone came to his senses.
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merrily
(45,251 posts)demwing
(16,916 posts)So Boner can plead on behalf of the middle class.
The story I want to hear is the one about what Obama gets in return...
Adrahil
(13,340 posts)I mean, it's how I'm saving for my daughter's education. I'm neither rich, nor a Republican.
It was a bad policy proposal.
mpcamb
(2,870 posts)It was a ' "giveaway" to the Republicans' in the sense that they can portray themselves as on the side of the middle class as they rise up to protect it.
The reality is that the law didn't do what it was intended. Poorer families simply don't have the ready cash to take advantage of it. The statistics are:
"Of the roughly seven million existing 529 plans, about 80 percent of the tax benefits go to households above $150,000, supporters of the Obama proposal say; 70 percent go to households with incomes over $200,000. That is because those people have the most money invested and can contribute $14,000 a year or more without worrying about reaching federal gift tax limits."
Rich people were the ones who benefitted.
It wasn't, isn't, won't send poor kids to college in any number.
The law, tho well-intentioned, didn't do what was intended.
I don't know if it could be reworked, but revoking it wasn't such a bad idea, given the outcome.
This current R congress will only use it in its present form for posturing.
Adrahil
(13,340 posts)It is making it possible for me to save for my daughter s future. In Indiana, we can even get a 20% tax credit up to $5000 in contribution. I don't see how ending this benefit would benefit anyone, and it would hurt people like me and my daughter.
And while I'm not poor.... Staring at what college is likely to cost when she attends in 6 years is pretty terrifying!
demwing
(16,916 posts)Was serious about dropping the benefit. I wasn't saying the benefit was a giveaway. I just don't think Obama ever planned to follow through with the threat The whole game was a bit of theater. No one here wants to screw over people like you, as should have clear from the context in my post, and the explanation by mpcamb.
Sorry for the confusion,
Cheers!
The Green Manalishi
(1,054 posts)in a different thread saying "if you can put money away in a 529 you aren't being taxed enough".
Shit, some people don't get it, just because rich folks MOSTLY use something doesn't mean it's bad; just as with capital gains, just index it so that only the wealthy pay taxes but let us lower middle class folks use the power of time and discipline. Rich folks use highways and airports, too, are we going to get rid of those?
Now hedge funds and offshore investments - yeah, screw those!
alcibiades_mystery
(36,437 posts)It was a dumb proposal with silly rhetorical support. The notion that only the rich use 529's doesn't play well pretty much anywhere. It was stupid.
Recursion
(56,582 posts)the majority of 529 users have six-figure incomes (ie, at least double the median household income), and four-fifths of users exceed the median household income.
Ace Rothstein
(3,161 posts)Using the median income for the country doesn't really work in most cases because of how different the cost of living is in different parts of the country.
bigworld
(1,807 posts)It's kind of astounding. And I say this as a supporter.
Recursion
(56,582 posts)
Capital gains should just be taxed as regular income. Solve this problem simply.
Puppyjive
(501 posts)We have invested money into 529 plan and Wall Street sucked out at least half of it during the recession. We have not gained much more than our original investment, which is the taxable portion. Our son will not be eligible for financial aid due to our income. This program is not the greatest. I would much rather invest in a college system in return for a reduction in costs.
Cryptoad
(8,254 posts)the middle class no longer have any money to save for their children's education. So in affect , this allows the Rich to not pay taxes on the cost of their children education. Sounds about right!
SheilaT
(23,156 posts)Just because everyone can't make use of a 529 isn't a reason to eliminate or tax them.
The plan to do so, even if it came from Obama, was just another one of the many proposals that divide people, that get them angry because someone else has a benefit they don't have.
My children benefited mightily from the 529's their grandparents funded.