Obama drops plan to cut tax benefits on 529 savings accounts
On Tuesday, President Obama dropped his proposal to remove the ability for people to withdraw money tax-free from 529 college savings plans.
The administration said that the tax break disproportionately benefited the wealthy, with more than 70 percent of accounts held by families who make at least $200,000 annually, and wanted to redirect more money to the middle class, The Washington Post reports. The White House faced criticism from parents and lawmakers on both sides of the aisle, who said the accounts are one of the best ways for families to save for college. "The President's plan has the puzzle pieces necessary to bring the middle class back, but this particular piece didn't fit," Sen. Charles Schumer (D-NY) said.
Officials say the backlash became "such a distraction" that it was decided the plan needed to be abandoned.
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Catherine Garcia has worked as a senior writer at The Week since 2014. Her writing and reporting have appeared in Entertainment Weekly, The New York Times, Wirecutter, NBC News and "The Book of Jezebel," among others. She's a graduate of the University of Redlands and the Columbia University Graduate School of Journalism.
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