House Republican leaders criticize President Obama’s plan to tax college savings

Democrat vs. Republican on whiteRepublicans in the Virginia House of Delegates criticized President Barack Obama’s plan to tax college savings accounts, which was released by the White House prior to the State of the Union Address.

“President Obama’s proposal to tax college savings accounts is the exact opposite of what lawmakers should be doing right now,” said House Speaker William J. Howell (R-Stafford). “With college costs growing steadily and students burdened with oppressive debt, making it more difficult to save for college is one of the last things Washington should do. This once again demonstrates the contrast between Washington and Richmond. While the President prepares to tax the college savings of middle-class families, the House of Delegates is preparing to pass legislation to make college more affordable and accessible.”

In his state of the union, President Obama outlined a tax plan that includes taxing earnings on the popular 529 college savings programs. A White House fact sheet on the proposal can be found here.

“Like Governor McAuliffe’s State of the Commonwealth Address last week, President Obama’s State of the Union sounded more like a stump speech for his liberal base than a governing agenda that can win bipartisan support in Congress,” said House Majority Leader Kirk Cox (R-Colonial Heights). “College is more expensive today than any time in recent history. Making it harder for hard-working, middle-class families to save for college by taxing college savings accounts is an irresponsible idea that defies commonsense. While the President is busy proposing new barriers to higher education, the House of Delegates is fighting to make college more affordable by proposing needed reforms to limit costly athletic fees for college students and to give state schools additional opportunities to cut wasteful spending.”

According to the College Savings Foundation, over seven million families use 529 savings accounts, saving and using over $80 billion per year on education costs.

“529 college savings programs are a great way to help parents save for college,” said Caucus Chairman Timothy D. Hugo. “Taxing these programs will dis-incentivize their use and make it harder on families who need a way to save for college. Our goal should be to make attending college easier, by making it more affordable and accessible which is why I’ve introduced legislation to broaden the application of these college savings plans. President Obama’s tax increase is a step in the wrong direction.”

Jackson Miller said, “Virginians have long been proud that we do things differently than the partisan gridlock in Washington, D.C. Unfortunately, much of what the President said last night could have been pulled verbatim from Governor McAuliffe’s speech a week ago. I look forward to showing my constituents that we can still get big things done in Richmond, with policies that make college more affordable, give students more opportunities to succeed and make Virginia an even better place to start or grow a business.”

Delegate Nick Rush said, “Virginia students borrow more than $1 billion every year for college. My flat-fee degree proposal would offer students the option of a more affordable college degree pathway in a high-demand field. President Obama’s threat of a college savings tax is contrary to the work we’re doing in Richmond to lower college costs.”

Background: In his State of the Union Address, President Obama outlined a new tax plan. The plan includes taxing earnings on popular 529 college savings accounts. “Specifically, the President’s plan will roll back expanded tax cuts for 529 education savings plans that were enacted in 2001 for new contributions” (White House Fact Sheet: www.whitehouse.gov/the-press-office/2015/01/17/fact-sheet-simpler-fairer-tax-code-responsibly-invests-middle-class-fami)

According to the College Savings Foundation, 529 college savings accounts are primarily used by middle-class families and taxing those plans would have a “chilling effect” on the use of the accounts. (College Savings Foundation Press Release: www.prnewswire.com/news-releases/college-savings-foundation-asks-for-recall-of-529-tax-treatment-roll-backs-in-white-house-tax-proposal-300023236.html)

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