SOTU Address, 2015

I watched the State of the Union address last night. Rhetorically, I thought it was better than most of President Obama’s SOTUs have been and I was glad he eschewed much of the laundry list we’ve come to expect.

He did touch on them briefly, however, and I’ll be very surprised if any of the proposals he’s touring the country with ever reach the point of regulation let alone legislation. I thought it was pretty short on structural change for this point in a phlegmatic recovery.

7 comments… add one
  • PD Shaw Link

    A bit shocked to hear that Obama wants to tax college savings accounts (529 plans). This is an account you can open with $25 and make contributions as low as $15. Slate says that college saving is for people with more money, and Obama is promising to use the revenue for college tax breaks. ??? Is saving beyond the middle class, now?

  • My understanding is that 529s were supposed to incentivize saving for college. Apparently, the thinking has changed.

  • ... Link

    Yes, saving in beyond the middle-class now.

  • PD Shaw Link

    I’ve been operating under the assumption that Obama simply cannot say no to anything that goes towards college; the free community college was sort of an idea that was relatively cheap, even if relatively ineffective. I’ll adjust my priors and believe it’s at best cynical political theatre, and at worst the desire to create more program-dependents for the Democratic party.

  • PD Shaw Link

    Ellipses: Might be true, I don’t know. Not really on message last night though, I hear.

    Here is the Slate article, btw: Obama Wants to Tax 529 Savings Accounts I suspect the data is confounded by including Coverdell accounts, which may not be as approachable. But no doubt saving for college (a) requires money to save and (b) requires a belief that such savings will not adversely impact need-based scholarships, etc.

  • Andy Link


    This is what frustrates me. The slate author thinks taxing 529 plans is a great idea, but that just means that people will have to save more. Yet the article points out that the cap is $14k a year. If the problem is that rich people benefit too much from this program, then reducing the cap is the more obvious and effective solution. $14k a year is a lot – it should probably be quartered which would preserve the benefit for those putting put a little away each month while removing the huge tax shelter.

  • PD Shaw Link

    @Andy, frankly the $14k per year is not clearly a limit, it’s the point where gift tax implications may arise. I think a person could even put in up to $70k at once by taking a five year election. People could try to use these as a tax shelter, but it seems like a pretty crappy one. The tax benefit is lost if the money isn’t spent on qualified educational expenses. But your main point is quite right, they can put limits on the contributions easily.

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