Obama's Tax Overhaul: 99% of Impact Paid for by 1%

President Obama will take the podium Tuesday night in the US Capitol and use this year's State of the Union to lay out a raft of middle class tax reforms and benefits that he wants to pay for on the backs of the nation's wealthiest—and, as Politico puts it, he'll "practically dare Republicans to say no." What's involved:

• Them's the breaks: Obama's expanded benefits for the middle class would include tripling the child-care tax break, reports the Wall Street Journal; consolidating and expanding education credits; rolling out a new credit for households in which both spouses work; and making retirement programs available to an additional 30 million Americans. The cost? About $175 billion over a decade, notes Politico—that's in addition to $60 billion Obama already wants to spend to make community college free.

• Who's footing the bill: Obama wants to raise $320 billion over 10 years, which should make the Republicans currently running Congress happy. Not so happy: He wants to do it by closing the so-called "trust fund loophole" (ie, vastly increasing the amount of inherited money that can be taxed), jacking the capital gains and dividend tax rates to 28% on those making more than $500,000 a year (for context, the AP notes that's the same rate as under President Reagan; it currently sits at 23.8%, up from 15%), and rolling out a bevy of bank fees. In short, an administration insider tells the Washington Post that 99% of the impact would fall on the nation's top 1% of earners.
• How it's going to play: Republicans aren't likely to trip over themselves to support the plan, though much of the party has long sought tax reform. But the administration appears to be betting that it'll be politically tough to explain to voters why they voted against expanded child credits or trust fund crackdowns—especially, as Politico notes, some Republicans have already put forward similar proposals. "If we all focus on middle-class opportunity and try to help middle-class families, there are clearly pragmatic things that we could do that have bipartisan support, and so let’s try to get them done," says a senior administration official.

(More President Obama stories.)