President Obama plans to call for billions in tax increases on top earners – including a hike in investment tax rates -- in order to fund new tax credits and other measures the White House claims will help the middle class
The president's proposals, which also include eliminating a tax break on inheritances, are likely to be cheered by the Democratic Party's liberal base when they are announced Tuesday night in his State of the Union address. However, the tax increases are all but certain to be non-starters with the new Republican majority on Capitol Hill.
The president's address -- his first to a Republican-led Congress -- will call for $320 billion in tax increases over 10 years. Aside from funding new tax credits including a tax credit for working families and expanding the child care tax credit, the White House says that money would go to funding measures to make college more afforable and accessible, including the president’s recently announced plan to make community college free for many students.

The centerpiece of the president's tax proposal is an increase in the capital gains and dividends rate on couples making more than $500,000 per year to 28 percent, the same level as under President Ronald Reagan. The top capital gains rate has already been raised from 15 percent to 23.8 percent during Obama's presidency.

Obama also wants to close what the administration is calling the "Trust Fund Loophole," a change that would require estates to pay capital gains taxes on securities at the time they're inherited. Officials said the overwhelming impact of the change would be on the top 1 percent of income earners.

While GOP leaders have said they share Obama's desire to reform the nation's complicated tax code, the party has opposed many of the proposals the president will outline Tuesday. For example, most Republicans want to lower or eliminate the capital gains tax and similarly want to end taxes on estates, not expand them.

Administration officials pointed to a third proposal from the president as one they hope Republicans would support: a fee on the roughly 100 U.S. financial firms with assets of more than $50 billion. Officials said the fee is similar to a proposal from former Republican Rep. Dave Camp of Michigan, who led the tax-writing Ways and Means Committee. Camp's plan, however, was part of a larger proposal to lower the overall corporate income tax rate.

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