President Obama’s tax plan aiming to help middle class

U.S. President Barack Obama proposed revisions of the tax code with a focus on imposing taxes on the top 1 percent of the households in the upcoming State of the Union Address on Tuesday (local time). The core of the revisions is to increase taxes from the wealthy by raising the capital gains tax rate from 15 percent to up to 28 percent. It also includes imposing more income taxes on inherited assets including stocks. If the tax revision is introduced, the U.S. government is expected to raise a total of 320 million U.S. dollars in tax revenues for the next decade.

President Obama, who has only two years left in office, has decided to raise taxes on the rich because of the widening gap between the rich and the poor and the collapse of the middle class. The gap is increasing further despite the strong growth of the U.S. economy. A General Motors employee made 50 dollars per hour in the present value 50 years ago, while a Wal-Mart employee is paid eight dollars per hour. The anger from the collapse of the middle class is targeted at the top 1 percent as represented by “Occupy Wall Street” protests two years ago.

President Obama’s taxation plan on capital gains and inherited assets seems to be influenced by Thomas Piketty, a professor at the Paris School of Economics. The French economist claimed that higher capital gains than the economic growth rate deteriorates distribution. Young people can hardly have a hope in a society where their father’s status determines their economic success and poor people cannot succeed. As a solution to this problem, he proposes a global wealth tax on the top 1 percent of earners.

Although many Americans welcome President Obama’s proposal on taxing the wealthy, it is unlikely to be introduced. It is doubtful whether the Republican Party, which seizes control of both the Senate and the House of Representatives, will pass the bill. President Obama’s proposal to raise taxes on the wealthy is different from France`s wealth tax, which is imposed on companies, but there are many differing views on whether the tax increase could address the gap between the rich and the poor. Maybe President Obama may want to pull his supporters together under the slogan of a wealth tax. Korea’s plan to increase welfare by taking money out of the pocket of the middle class oddly contrasts with the U.S., which plans to support the middle class by levying taxes on the top 1 percent of earners.