President Obama is expected to introduce a number of tax proposals to assist middle and low income families when he presented the 2015 budget on Tuesday. The proposals look at making college and child care more affordable, while also making easier retirement savings possible. The proposals will help the working poor.
According to the administration, the cost that will be incurred due to the proposals would be sponsored by the closing of tax loopholes which permit high income professionals to avoid payroll and income taxes paid by lesser paid-workers.
These proposals have to be tempered with the harsh reality of the budget: the Senate and the House adopt very little or do not adopt anything from the budget proposals. This time it could be worse as the mid-term election looms on the horizon and nobody expects anything to happen legislatively. In this scenario, tax reforms are out of the question. However, this clearly exhibits how the president thinks in the case of lawmakers choosing to make any kind of changes to taxes.
Obama not for reducing annual growth in case of Social Security benefits
The White House has announced that President Obama will not give his backing to a proposal which will reduce annual growth when it comes to Social Security benefits.
The liberals were widely angered by the proposals. It would mean changing the formula of inflation used to determine the increase in the cost of living in the light of Social Security checks. If the switch to eponymous termed “chained CPI” really happened, it will have the effect of smaller increase in benefits compared to the widely implemented consumer price index.
Widening tax credit for the working poor who has no children
Obama has proposed the expansion of the Earned Income Tax Credit (EITC) for workers who have no children. The EITC is part of an anti-poverty scheme created to reward and encourage work. The credit mainly benefits workers who already have children. It offers no help to extremely low income childless workers. The maximum credit offered to childless workers is less than a tenth of what they will receive if they had children.
Creation of Auto IRAs
Obama will request the Congress to allow automatic IRAs to make retirement savings easier for workers who have no access to the 401(k). It is dependent upon the employee to decide the quantity of money that would be deducted from their paychecks and could decide to opt out of the program.