Obama’s State of the Union Address - What Does It Mean For Taxpayers?

In his election-year State of the Union address, President Obama set forth a long list of domestic economic proposals, many of which centered on jobs and changing the tax codeIn his election-year State of the Union address, President Obama set forth a long list of domestic economic proposals, many of which centered on jobs and changing the tax code. Many people were anxious to see what direction President Obama intended the United States to take in 2013, especially after the country coming to the brink of financial ruin during the "fiscal cliff" scenario of January 2013. What has become quite clear from the State of the Union address (SOTU) is that the president can only see one clear path through the financial droughtthat the US economy is currently mired in - to increase taxes and promote jobs development.

The President aims to reduce spending by US$900 billion in specific areas while also generating US$600 billion in new revenues by increasing taxes on the wealthy and those with large corporate business interests. Regardless of your political beliefs the reality is that the prior Republican administration took the country from a budget surplus to a budget deficit.  It appears that the only way to appease the rich and powerful people in the United States is to grant them tax breaks, then again that did guarantee the prior administration two terms in office.

In terms of taxes the President's State of the Union address made it clear that the US$600 billion he intends to generate will come almost entirely from a combination of closing existing tax loopholes for the rich and also increasing the level of taxation on those who can most afford it.  It does appear that President Obama is looking to stop the wealthy from benefitting from the taxation of the less financially capable.

Another area of taxation which will benefit the US economy, and in turn your family, is the creation of a new offshoring tax, which will simply ensure that if US companies decide to move jobs overseas as a cost-cutting measure that they are taxed appropriately for doing so. The reality is that many large firms don't offshore to streamline their operation but simply to put more cash into the pockets of their directors. This move by the president has the potential to generate significant tax revenues and also to help stimulate the creation of jobs in the US instead of shipping them all overseas.

For the average American the SOTU address is good news overall in terms of benefitting from a simpler tax code and knowing that the wealthy citizens of the United States are not going to get all the tax breaks. It took years to create this financial crisis so it's going to take some time to solve it.

The question now is whether or not the Republican Party are going to veto and hinder the President’s moves – it’s yet to be seen if he has any success with new taxes in terms of revitalizing the economy.

The answer, it seems, is in smarter government and not simply bigger government.