The Obama administration’s plan to tax so-called ‘529 college savings accounts’ has been dropped after the proposal ignited widespread criticism across the country over the impact on the middle class Americans.
According to a White House official, the 529 proposal was “a very small component of the president’s overall plan to deliver USD 50 billion in education tax cuts for middle-class families. We proposed it because we thought it was a sensible approach, part of consolidating six programs to two and expanding and better targeting education tax relief for the middle class.”
The development came after House Speaker John Boehner (R., Ohio) made a public call on Tuesday asking the White House to withdraw the taxing plan. The call was also privately backed by some of the Democratic leaders.
While conversing with the senior administration officials aboard Air Force One, House Minority Leader Nancy Pelosi (D., Calif.) also pressed for dropping the taxing plan.
“Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision,” a White House official said on Tuesday.
Ahead of his State of the Union address last week, Obama had proposed a set of tax changes for the rich Americans eyeing to boost the incomes for low as well as middle classes.
The move comes as a setback for the Democratic President.