Skip to comments.The Year Obama Tried To Kill Your 529 College Savings Plan
Posted on 01/01/2016 9:19:34 AM PST by Kaslin
At the start of 2015 President Obama had a goal: use the blunt force of taxation to effectively kill 529 college savings plans.
With great pride, Americans from all walks of life rely on 529 accounts to help put their kids, grandkids, nieces and nephews through college. Earnings grow tax-free and distributions are tax-free provided the funds are used for qualified college expenses. But this year Obama decided it was time to tax the earnings in 529s while pushing people toward a government program designed by his administration's best and brightest central planners.
It was a spectacular failure. The public backlash against his proposal was immediate, heartfelt, and fierce. His extensive personal history praising and using 529s -- and the White House's past strong support for 529s was exposed. He shelved the plan. The defeat was embarrassing and total.
As the year comes to a close the Obama administration would prefer we all just forget the whole ordeal. There is scant coverage of the issue in beltway journalists' end of year look-backs. But it is important to review what happened not as a way to spike the football, but as a lesson of what the Left might do to your savings if given full control of the federal government.
The 529 issue emerged late on a Saturday night -- Jan. 17, 2015 -- when the White House gave a select group of reporters an early look at the tax provisions in President Obama's budget. Those invited to the phone briefing were provided a ten-page, single-spaced document which criticized 529s as "upside-down."
One of the reporters on the call provided the document to Americans for Tax Reform, whose tax policy director Ryan Ellis published a late night analysis ringing the alarm bell on the Obama 529 tax.
On Monday Jan. 19, Ellis detailed the ways the 529 tax would fall heavily on the middle class. The next day, the Drudge Report posted ATR's documentation of how the 529 tax was a violation of President Obama's "firm pledge" not to raise any form of tax on any American making less than $250,000. Top radio hosts Rush Limbaugh and Dave Ramsey weighed in passionately against the new tax.
It took the mainstream media nearly a week to realize what was happening. On Jan. 22 the New York Times finally reported on the issue with an article headlined, "White House Proposals on 529 College Savings Plans Would Reduce Benefits." On Jan. 23, the Washington Post came out with a piece titled "Critics Pounce on Obama's Plan to Cut the Tax Benefits of 529 College Savings Plans," and POLITICO deemed 529s "The Hot New Tax Debate."
The Obama administration doubled down. In a Jan. 23 2015, White House Council of Economic Advisers chairman Jason Furman deemed 529s to be "ineffective" and "tilted towards the upper end."
Embarrassingly for the White House, at the same time Team Obama was calling 529s "upside down," "ineffective," and "tilted towards the upper end," Ellis and ATR rolled out a series of items detailing official White House and Obama family experience with 529s that told a different story.
In his 2006 book The Audacity of Hope, Obama praised 529s, and in 2007 actually used book earnings to make a $240,000 contribution to his own family's 529 accounts, according to financial disclosures. With his own 529s topped off, he tried to yank the ladder away for everyone else.
It was also revealed that in July 2010, during a lengthy interview on ABC's Good Morning America,Obama cited his own 529 accounts as an example of how he can identify with the middle class. He was asked, "Can you feel the pain directly that other Americans are feeling?" His answer:
"Well, part of it has, that part that is devoted to Malia and Sasha's college fund was in a 529, you know, that had been set up when I was still a state senator. And, obviously, that goes up and down with the stock market and so it's lost value like everybody else."
The hits kept coming. It turns out the Obama White House was for 529s before it was against them.
On Sept. 9, 2009, President Obama's White House Task Force on Middle Class Working Families issued adetailed report on 529s. The top conclusion from the report:
"529 plans are an attractive and convenient means of saving for college."
The report was released with great fanfare. Vice President Biden, Treasury Secretary Tim Geithner, and Education Secretary Arne Duncan shared a stage at the launch event at Syracuse University. Geithnerstrongly touted 529 plans:
"Today I want to highlight one program in particular, Section 529 savings plans.
These plans can be an immensely effective way for Americans to save for college. They are generally administered by the states, and they allow people to put aside money for college and enjoy investment earnings that are free of federal taxes and, in some cases, receive state tax benefits, as well. When state tax benefits are included, a typical middle class family can accumulate 25 percent more in 529 accounts than they can in a typical taxable savings account."
An official White House statement from the same day praised 529s as "a convenient, tax-preferred way for families to save for college."
They could not have said it better. But by 2015 the White House was moving to tax 529s out of existence.
On Jan. 27, 2015 public pressure reached fever pitch. An unnamed White House official told the New York Times the 529 tax hike would be dropped. The 529 issue had become a "distraction," said the official.
A major Obama budget initiative had just been utterly demolished. In ten days flat.
Even after formally dropping the 529 tax hike from the budget, the White House stood firm in support of the policy itself. During the Jan. 28 White House press briefing the following exchange took place:
Reporter: "So you call this a distraction. Do you still think this is a good policy? There was so much backlash particularly from middle class Americans who said - we really value these plans, so do you still stand by this as good policy?"
White House spokesman Eric Schultz: "Sure. We do."
Schultz then gave a heads up to the assembled reporters that the printed copies of the budget would still contain the 529 tax because the announcement to abandon it "was made after the book was in the shop." A fitting coda.
The move to tax 529s struck a nerve with the American people. Later in the year the GOP congress passed two bills expanding and strengthening 529s. Obama had no choice but to sign both into law.
Obama is a f***ing douchebag of the first order. Don’t expect consistency or logical consideration in any of his actions.
What a scumbag.
Obama must have concluded that too many white families had 529 accounts.
Obama’s use of 529s is evidence that they are tools of the ruling class from wealthy white families, since he is the grandson of a wealthy white family.
Yes letâs not forget that several Democrats have floated the idea of confiscating 401K accounts to shore up Social Security.
The Democrats hate the middle class. They hate people who can make it on their own because it shows just how little people really need government.
I work with an African-American man who has 2 daughters in college. I have put two children through and have more to go.
I mentioned how much my wife and I have sacrificed to pay their tuition, fees, room, board, and expenses.
He looked at me first with incredulity, and then satisfaction, and exclaimed:
"I have had hardly paid a dime."
I later learned that his daughters did not earn academic scholarships, but Affirmative Action payments by the universities that essentially have his daughters a free ride.
How are we not to feel bitterness towards this injustice? How much longer can it go on?
That was my first thought, more backdoor “social justice”.
Whites Need Not Apply
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Obama is a skin-bag full of crap.
Instead of bitterness... I'd say just express more pride in your own accomplishment, and forget about the parasites. You've raised and educated decent children, taught them to be independent and Conservative, and turned them loose on the world to make it a better place by their own talents, their own lights, and their own hard work. And that is pretty damned fine thing to think about.
That's what Americans do - we make it on our own accord. The left can't say that.
Everything else will be what it what it will be; you did your part.
In his 2006 book The Audacity of Hope, Obama praised 529s, and in 2007 actually used book earnings to make a $240,000 contribution to his own family’s 529 accounts, according to financial disclosures. With his own 529s topped off, he tried to yank the ladder away for everyone else.
He should check his Black Privilege.
MSM currently doing same thing, hiding Obama’s massive New Years’ Eve expansion of immigration waivers for college graduates via Federal register.
Government Black Hole / Obamafail bump for later....
Kill the program - something Obama and I agree on.
It is. I have noticed the Takers never do well even with their theft.
Have your son or daughter check “African American” on the college application
If a boy can be a girl or a girl can be a boy or whatever
Why can’t a pale skin person be African American?
Anyone who disagrees with you is a racist, see how that can work in our favor?
We all do this, this would bring down all affirmative action programs.
A long time. 25 years ago a guy asked me if my daughter’s got aid or loans to go to college. I said neither, I just work more hours and pay cash. I see it hasn’t changed in those 25 years.
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