News and analysis
January 20, 2015

Obama Emphasizes Tax Plan in State of the Union Speech

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In his sixth State of the Union address, President Obama hailed a resurgent U.S. economy while calling for an increased federal minimum wage, expanded access to child care, and the closing of tax "loopholes"as means to embolden the middle class.

"Middle-class economics works," President Obama said. "Expanding opportunity works. And these policies will continue to work as long as politics don’t get in the way."

The country has added 11 million new jobs in recent years, he said, and the growth is reaching the lives of more and more Americans.

"Will we accept an economy where only a few of us do spectacularly well?" he asked. "Or will we commit ourselves to an economy that generates rising incomes and changes for everyone who makes the effort?"

In a communications strategy tailored for the digital era, the Obama administration previewed some of the meatiest policy proposals in the weeks leading up to Tuesday’s State of the Union address. They include two years of free community college for millions of American students and enhanced access to high-speed broadband Internet.

President Obama’s tax proposal, which was released last week and includes raising the capital-gains tax to 28 percent from its current 23.8 percent for high-income filers, while maintaining an exemption for assets going to charities, was welcomed by some nonprofit leaders.

"Higher tax rates, whether from estate or income taxes or capital-gains taxes within the income tax, tend to provide additional incentives for charitable giving," Eugene Steuerle, a fellow at the Urban Institute and an expert on tax policy, said in an email to The Chronicle before the address Tuesday. "However, proposals to cap the amount of deductions, such as the President has proposed in the past, can offset or more than offset that effect."

The nonprofit world had a presence in the live audience in the House chamber on Tuesday. Among the guests seated with Michelle Obama and Jill Biden was Prophet Walker, the 27-year-old co-founder of a Los Angeles-based nonprofit called Watts United Weekend, which brings together young residents of South Los Angeles public-housing projects to deter gang rivalries.

Rosa Velazquez, a board member of the Winthrop Rockefeller Foundation and immigration-rights leader, attended as the guest of Rep. Zoe Lofgren, a California Democrat. And Rhode Island Sen. Jack Reed brought as his guest Neil Steinberg, chief executive of the Rhode Island Foundation.

Send an e-mail to Megan O’Neil.