Obama To Offer Tax Proposals In State Of The Union Speech

President Barack Obama is turning to his biggest television audience of the year to pitch tax increases on the wealthiest Americans and put the new Republican Congress in the position of defending top income earners over the middle class.

As Obama continues to signal what he will propose during Tuesday's State of the Union address, senior administration officials said Saturday that he will call for raising the capital gains rate on top income earners and eliminating a tax break on inheritances. The revenue generated by those changes would fund new tax credits and other cost-saving measures for middle-class taxpayers, officials said.

Tax increases are rarely welcomed by congressional Republicans, who now hold majorities in the House and the Senate for the first time in Obama's presidency. Obama's tax proposals will likely be dismissed, if not outright ignored, by lawmakers outside the Democratic Party's liberal base.

Obama also is expected to call for lawmakers to make communitycollege free for many students, increase paid leave for workers and enact broad cybersecurity rules. Administration officials disclosed details on the tax proposals on the condition of anonymity because they were not authorized to discuss the proposals by name ahead of the president.

The centerpiece of the president's tax proposal is an increase in the capital gains rate on couples making more than $500,000 per year to 28 percent, the same level as under President Ronald Reagan. The top capital gains rate has already been raised from 15 percent to 23.8 percent during Obama's presidency.

Obama also wants to close what the administration is calling the "Trust Fund Loophole," a change that would require estates to pay capital gains taxes on securities at the time they're inherited. Officials said the overwhelming impact of the change would be on the top 1 percent of income earners.