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Tax reform’s role in Obama’s ‘middle-class economics’

The president roughed out some proposals for the middle-class in his State of the Union speech. But how would they work?

“So the verdict is clear,” declared President Barack Obama in his State of the Union address on Tuesday. “Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.”

His speech yesterday zeroed in on helping America’s middle class but just skimmed over his administration’s tax reform plan.

The plan includes raising the top capital gains tax rate by more than 4 percentage points, to 28 percent, closing certain tax loopholes (including tax benefits for corporate jet owners and special breaks for oil and gas companies) and charging banks a 0.07 percent fee if the institution owns more than $50 billion in assets.

Congressional Republicans aren’t buying it.

“The Republicans in the House — we have been fighting for middle-class tax breaks," said Rep. Tom Marino, R-Pa. "We sent over 400 bills to the Harry Reid Senate. Why after six years does the president say we need to cut middle-class taxes?” 

House Speaker John Boehner said on Wednesday, “We’d love to do tax reforms, but you heard the president last night call for raising taxes again. Now if he wants to raise taxes, that’s going to make it very difficult for us to come to some agreement on how we’re going to reform our broken tax code.”

On the whole, middle-class Americans have yet to bounce back from the Great Recession. Home, stock and pension ownership are down an estimated 10 to 20 percent since 2007. And according to a report by the Pew Research Center, middle-class weekly wages have fallen by more than 3 percent since 2000 while income has risen by nearly 10 percent for the wealthy.

What would tax reform mean for the middle class?

Could it bring relief?

Will politics get in the way of a bipartisan solution?

We consulted a panel of experts for the Inside Story.

The above panel was assembled for the broadcast of “Inside Story” to discuss.

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