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Obama drops plan to end tax breaks for popular college savings accounts


WestVirginiaRebel

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WestVirginiaRebel
?intcmp=latestnewsFox News:

President Obama has dropped his plan to end tax breaks for popular college savings accounts known as 529s, sources told Fox News on Tuesday.

 

The decision comes in the wake of stern criticism from Republicans and pleas from top Democrats, including House Minority Leader Nancy Pelosi, to drop the plan.

 

The 529s, which allow college savings to grow tax-free, mostly are used by upper-middle- and middle-class families. Low-income families typically don’t have thousands of dollars saved up for college, while very wealthy families are more likely to have trust funds in place for their children’s education.

 

Administration officials had claimed last week that they were going after the 529 accounts because they unfairly benefit high-income people. Under the proposed change, Americans eventually would have had to pay taxes on the earnings when they were withdrawn.

 

A White House official told Fox News late Tuesday afternoon that the 529 provision was a "very small component" of Obama's plan to cut taxes for the middle class.

 

"Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President’s broader package of tax relief for childcare and working families," the official said.

 

Earlier Tuesday, House Speaker John Boehner called on Obama to drop his plan, and highlighted new legislation that he said would protect and expand on the 529s. In a statement, he applauded Obama's decision.

 

"I’m glad President Obama has decided to listen to the American people and withdraw his tax hike on college savings," Boehner said. "This tax would have hurt middle-class families already struggling to get ahead."

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Sorry, kids-no "free" class for you...


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