I don’t know what you guys did last night, but Johnny got home late, and we curled up on the couch with some leftovers and watched the State of the Union together. We’re doing our boring, vanilla, personal-finance-geek image no favors by being so candid about our nightly festivities. To be honest, I almost fell asleep twice (third trimester, folks!) during the speech, but there were some interesting financial takeaways that we wanted to get your thoughts on today.
This really isn’t intended to be a politically-charged discussion at all, but here were a few topics that were presented at the State of the Union that we thought might be relevant for a lot of us:
- Two free years of community college for qualified students
- Tax credit for working married couples with children
- Childcare credit increase to $3000 per child
- Employer paid time off requirements for sick leave and maternity leave
- Elimination of federal tax savings on 529 college savings plans
- Capital gains tax raised from 20% to 28% for highest tax-bracket Americans
Here’s our brief take on a few of the proposals:
- Hooray for paid time off for mandatory sick leave and maternity leave! Our country is pretty much the worst when it comes to maternity and paternity leave. We’ve got a long way to go. I swear paternity leave should be our biggest men’s rights issue (is that a thing?) of our time. It’s precious family bonding time and so so so important for me to have Johnny home with me during that transition. Only a week or less is just ridiculous.
- We like the idea of offering free community college for those who work hard, get good grades, and graduate on time. Having accumulated a significant (to us) amount of student loan debt, we’re proponents of anything that lowers the burden for future college students.
- Nothing in life is free. And unfortunately, the free community college and other initiatives geared toward helping college students comes at a cost. Ironically (and infuriatingly), the President’s proposal calls for an end to tax-free withdrawal on 529 college savings accounts. Huh?! Currently, you can put your post-tax income into a 529 plan and let it grow tax free until it’s withdrawn for qualified education expenses only — no loopholes, no gimmicks, just a good way for hard-working, middle-class families to prepare for college tuition costs and avoid debt. Under the new proposal, bye-bye tax savings. Your already-taxed money would be taxed again. So minus a one-time state tax perk, the 529 would basically become a worthless savings vehicle. We’re not big fans of taxes, period, but helping one group of college students at the expense of others is absolutely mind-boggling.
- The other initiative we felt iffy on was giving an additional $500 credit to parents who both work outside of the home. We’re all about making things easier for working parents (been there, done/kinda still doing that), but it feels a bit discriminatory to parents who have made an equally difficult decision to stay at home and live off one income. Many families with a stay-at-home parent that we know are barely in the middle class, and this kind of initiative implies that stay-at-home parents wouldn’t benefit from tax relief. It also incentivizes one type of work over another equally admirable type of work. And don’t get me started on parenting being a form of “work.” Maybe it’s because it came from a room of mostly male lawmakers, but it just felt insulting. Girl power.
Hopefully we can keep today’s discussion from getting too controversial or Jerry Springer-y, but what are your thoughts on President Obama’s State of the Union proposals?
(photo credit: whitehouse.gov)