There were a lot of really bad ideas in Barack Obama’s State of the Union Address this year. But one of them was truly a stinker.
Taxing money set aside for college is a terrible idea.
For years now, parents and grandparents have been able to set up so-called 529 accounts for their children and grandchildren, to help prepare for one of the biggest expenses their loved ones will ever have to face – college. The money in those accounts is currently allowed to grow, tax-free, with the understanding that every cent in that account will be needed to offset a bill which can easily be $100,000 to $200,000 for four years, depending on the college.
President Obama and his brilliant advisors apparently saw this as too tempting a target to let go tax-free, so they decided to pounce. After all, they had to find a way to pay for Obamacare, the excessive use of food stamps which they have heartily encouraged, and “free” community college.
When Democrats in Congress realized that Republicans in Congress were calling for an early vote on Obama’s proposal, they panicked. They’d actually have to have their fingerprints on this unpopular proposal, and they screamed like scalded dogs.
Democrats reportedly began calling Nancy Pelosi, their leader in the House, and Congressman Chris Van Hollen, the lead Democrat on the House Budget Committee. Pelosi and Van Hollen apparently called President Obama, who was traveling from India to Saudi Arabia on Air Force One, begging him to abandon the plan. Realizing that not only did he have universal Republican opposition to his plan, but he also had significant opposition from within his own party, Obama decided to cut his losses.
The White House announced through their unofficial mouthpiece, The New York Times, that the President had had a change of heart, and he was dropping his plan to tax college savings. Hallelujah!
This is nearly record time for an administration to drop a proposal, of any kind. It illustrates how truly bad an idea it was in the first place. After all, the Obama Administration and Democrats in general like to tout themselves as champions of the “middle class.” And it is middle class folks, and some upper middle class Americans, who most take advantage of 529 accounts.
The whole thing was amateurish, poorly thought out, and embarrassing.
Ironically, not only is the Obama Administration facing failure of its proposal to raise taxes on college accounts, but there is a bipartisan proposal being introduced to expand and strengthen existing 529 accounts. I intend to support this effort. (Although Obama would probably veto it, and it’s unlikely that we’d have the votes to override his veto.)
Anyway, that’s the deal. And at least for the foreseeable future, you’ll still be able to put away money, tax-free, for your kids’ or grandkids’ college education. Common sense won one for a change.
