Raising Taxes on College Student’s Savings Attracts Attention of State Treasurer

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DES MOINES, Iowa--President Obama wanted to get early attention to his State of the Union priorities and he got it. Iowa State Treasurer Mike Fitzgerald is paying close attention to one plan in particular, that would tax earnings of student's college savings plan.

The savings plans are among the changes the president has in mind. Right now, students don't have to pay taxes on the earnings they accrue from the contributions into their 529 college savings plan. Fitzgerald oversees the state's plan. The president would start requiring them to pay taxes on that, to help him fund his plan to offer two years of free community college.

Fitzgerald's office emailed this to Channel 13 news' inquiry into the changes:

"We are watching this closely. As you know, the treasurer is very passionate about the 529 plans. We believe we have a compelling story about how these plans have helped people at all income levels and will make our case along with all other states. Given the current environment in Washington, we are skeptical that it will pass. But as I said, we will be watching it closely and weigh in as needed."

Iowa Senator Chuck Grassley said the president is making a bad decision to push for tax hikes. The president also wants to raise capital gains taxes, the taxes people pay on their investment earnings, for those make at least $500,000  a year. He would use some of that money to give $500 a year tax credits for families with two working adults. Grassley said, "It seems like he's going to ask for a big tax increase. And I think that's bad for the economy by taking money out of people's pockets and sending it to Washington."

Viewers had plenty to say on Channel 13's Facebook page. Read them here and add whether you believe in raising taxes for some to lower taxes for others. 


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