The Obama administration’s walk-back of its proposal to tax so-called “529” college savings accounts mustn’t be confused with a loss of interest in the idea. Here, the only principle that matters is that if you have money, they are thinking about how they can get it.
The general outrage that followed the State-of-the Union proposal is easily understandable in that taxing withdrawals from 529 accounts would be a brazen breach of taxpayer trust, but it also needs to be understood on an even more fundamental level.
Remember, the idea was to use the proceeds of taxing 529s as a funding source for the “two years of free community college for everybody” rolled out a couple of weeks earlier—in other words, to take the money families had saved and use it to pay for a government-issued version of the thing they were saving for. And therein lies a flawless, textbook illustration of what the Obama administration stands for, and what it most despises and fears.
People who work and save to provide for their own children’s education represent a mortal threat to the kind of government the current administration strives to become. When people give their offspring a chance to avoid indebtedness and dependency on government, they also liberate them from fearing to hold thoughts or perform actions the government might dislike.
Holding a 529 in today’s America makes you an Enemy of the State.
Noisily “withdrawn,” the tax thievery proposal is still in the Obama budget. This document is dead on arrival in Congress, but don’t be complacent. As the burden of growing entitlements pushes government finances closer to outright collapse, ideas like this will look better and better to a Congress of either party.
Got a Roth IRA? Just asking…