State of the Union spoilers: What you need to know about Obama's proposal for the middle class

Obama announces free college plan
Obama announces free college plan

The White House has made it clear recently: President Obama intends to use Tuesday's State of the Union address to make a statement about where Democrats stand on a key issue ahead of the 2016 election -- the middle class.

Obama is expected to unveil proposals that would expand tax credits for parents, workers and students. And he'll call for paying for them by closing tax breaks on the the wealthy and hitting mega banks with new fees.

If the point is to start a debate, that has begun. If the point is to get his package passed as a whole, well, that's not going to happen.

Republicans with whom he's frequently been at loggerheads now control both houses of Congress. They are making it clear they disagree with Obama's approach. Representative Jason Chaffetz said Sunday on CNN they're a "non starter."

Below is a crib sheet on what the White House says Obama will outline. Let the debate begin!

Introduce tax credit for working couples: The White House says the aim of this proposal is to help families in which both spouses work, while defraying the costs of things like commuting and care for children or aging parents.

The White House says it would affect 24 million couples. The full value would be available to couples earning less than $120,000, while couples with income up to $210,000 would receive partial credits.

Require paid sick leave: Obama backs a proposed law that would allow workers who don't already receive paid sick time to accumulate up to seven days each year. (A study found more than 40% of workers in the private sector don't receive the benefit now.)

Related: I haven't gotten a raise in years

He is also instituting a new policy for federal employees: six weeks of paid leave for new mothers and fathers, and the same amount of time to care for an ill relative.

Expand child care tax credit: Childcare is expensive, and the federal incentives -- like flexible spending accounts and the Child and Dependent Care Tax Credit -- offer a patchwork of support.

The White House says Obama's plan would "streamline" the options into a single credit. It would cover half of childcare costs with a maximum credit of $3,000 per pre-school child.

Encourage higher education: Obama's proposal would also expand the federal incentives for a college education.

The White House said the president would increase the maximum refund under the American Opportunity Tax Credit from $1,000 to $1,500. He would also make it permanent; it is currently set to expire in 2017.

Another part of his plan would answer a major tax concern of students who qualify for income-based loan repayment plans. After 20 years of income-based student loan payments under the Pay As You Earn plan, the remainder of the loan is forgiven, but students still owe tax on it. The proposal would also simplify the rules for federal Pell Grants and taxes on student loan interest.

Related: Six ways to get free money for college

Expand the Earned Income Tax Credit: There's something in Obama's proposal for working families without kids, too.

The Earned Income Tax Credit is available to low-income workers. But the credit is significantly smaller for a childless earner than someone with children.

Obama's proposal would give childless workers who are already eligible twice the amount they can currently claim. He would also expand it to include more low-income workers by raising the cap on claiming the credit -- currently at $14,590 for a childless single person -- and lowering the eligibility age from 25 to 21.

Encourage retirement saving: The president's retirement savings push is mostly targeted at companies.

His plan would expand access to retirement savings by requiring nearly all employers who don't currently offer an IRA to automatically enroll their employees in one. It would also require companies to accept more part-time employees into retirement savings plans.

Obama's plan also calls for tax cuts for companies that currently offer IRAs, begin offering IRS or automatically enroll employees.

That's on top of the myRA, a starter IRA for people who don't have a workplace retirement plan. It was unveiled in last year's State of the Union address and became available this year.

Related: Is Obama bank tax smart policy or bank bashing?

Tax inheritances like other capital gains: Obama also called for changing the way inheritances are taxed.

When individuals sell an investment, like a stock, they calculate the taxable value by subtracting what it was worth when bought from what it was worth when sold. (That's called "capital gains.")

But when stocks are passed from one generation to another, the calculation changes: The person who inherits doesn't pay tax on capital gains during the previous owner's lifetime. That lets "the wealthy pass appreciated assets onto their heirs tax-free," the White House said.

Obama wants to change that, unless the investment is donated to charity. The White House outlined several exemptions it says mean the change would mostly hit the wealthy, like allowing people to inherit a home and small businesses without another hefty dose of taxes.

He also wants to increase the tax on capital gains from 20% to 28%.

His other proposals: The president has been offering up State of the Union "spoilers" for two weeks now, like his proposals to make community college free for some students, increase internet speeds, and lower fees on government-backed mortgages. Some require Congress to act; others, like the mortgage plan, don't.

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