You need to know you place, peon! (thanks Glenn Reynolds). From “The Daily Shot:”
Hey, remember when President Obama proposed ending the tax-free status of 529 college-savings plans?
This is one of those allegedly unfair loopholes in our tax system that he’s completely fine with utilizing for his own family. Back in 2007, he and Michelle put a huge amount of money in a 529 plan for their daughters:
According to their 2008 tax returns, the Obamas took advantage of a unique feature of 529 plans that allows account owners to front-load five years’ worth of contributions, $240,000 in total for the two girls. They did so without triggering gift taxes — now levied on any gift exceeding $13,000 a year. Form 709, the federal gift-tax form, shows that Barack and Michelle Obama made equal contributions of $120,000 each, or $60,000 to each of the two children in 2007.
The claim that the tax-free status of 529 plans represents some sort of giveaway to the rich turns out to be typically inaccurate administration propaganda:
As of March 2014, close to ten percent of 529 accounts are owned by households with income below $50,000, over 70 percent are owned by households with income below $150,000, and almost 95 percent of 529 accounts are in households with income below$250,000.
The good news — if temporary — is that Obama is dropping the proposal:
President Obama, facing angry reprisals from parents and from lawmakers of both parties, will drop his proposal to effectively end popular college savings accounts known as 529s, but will keep an expanded tuition tax credit at the center of his college access plan, the White House said Tuesday.
The decision came just hours after House Speaker John A. Boehner of Ohio demanded the proposal be withdrawn from the president’s budget, due out Monday, “for the sake of middle-class families.” But the call for the White House to relent also came from top Democrats, including Representatives Nancy Pelosi of California, the minority leader, and Chris Van Hollen of Maryland, the ranking member of the Budget Committee.
Ms. Pelosi pressed the case to senior administration officials on board Air Force One as she flew with the president from India to Saudi Arabia, according to Democratic aides familiar with the discussions.