Obama's proposed tax hike would have directly targeted Louisiana's START Program

BATON ROUGE, LA – State Treasurer John Kennedy applauded U.S. House Speaker John Boehner, R-Ohio, and other congressional leaders Wednesday for successfully stymieing President Obama’s proposal to tax withdrawals from college savings plans.
“The president’s proposal would have been detrimental to middle class families and students in Louisiana. Saving for your child’s college education is something every parent should try to do. Often, it’s a financial sacrifice to put money into a savings program,” said Treasurer Kennedy. “Parents know it’s a sacrifice that will reap rewards by paying for their children’s education and ensuring a good future for them.”
President Obama’s tax increase proposal would have impacted what are known as 529 college savings plans. Louisiana has a 529 college saving plan – known as the START program. Thousands of Louisiana taxpayers put money into START each year. START has more than 50,000 participants and nearly $590 million in account balances. Under the president’s original proposal, withdrawals from college savings plans would have been declared as income. The proposal would have amounted to a bait-and-switch move since contributors invested in the accounts with the understanding their withdrawals would be tax-free.
According to numerous media reports, Boehner and others, including House Minority Leader Nancy Pelosi, led a bipartisan charge to convince the president that the proposal needed to be withdrawn. The White House told “The Wall Street Journal” that the tax increase proposal has been dropped because it became a distraction.
“Speaker Boehner and other leaders pressured the president to drop this bad proposal. They were right to pressure him,” said Treasurer Kennedy. “If the president’s tax increase became a reality, it would hurt the middle class, the backbone of American society. We don’t want to take away a savings incentive and saddle Louisianians with more student loan debt. This proposal is now in the garbage where it belongs. The American dream is safe.”

Contact:
Michelle Millhollon
(225) 342-0012
mmillhollon@treasury.state.la.us