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Don’t expect tax talk in Obama’s final State of the Union

January 12, 2016

Sorry, fellow tax geeks, we're likely out of luck tonight. President Barack Obama probably won't talk much, if at all, about taxes in his valedictory State of the Union address.

State of the Union highlights video screen capture_PoliticoClick image for highlights of President Barack Obama's prior State of the Union addresses, plus Politico's preview of tonight's speech.

In fact, don't expect the usual laundry list of legislative proposals.

Even when a president will be around to fight for his annual State of the Union, or SOTU, wish list, few of the proposals ever find their way into legislation, much less law.

So when a Chief Executive is wrapping things up and, as in Obama's case, is facing a determined opposition party in both the House and Senate, it's not worth it to spend time on matters that have no chance at all.

Instead, SOTU addresses by presidents in their final year in office tend to focus on accomplishments, with a dash of an aspirational overview of the challenges still facing the country. Expect that tonight from 44's lame-duck address.

That said, a couple of tax issues might get a mention.

Taxes on the wealthy: With the growing wealth gap getting a lot of attention from 2016 presidential hopefuls, especially on the Democratic side, Obama might throw in some comments about the need for a change in the carried interest rule.

This current law/loophole allows investment managers' income to be paid as a share of the profits from the holdings they oversee. This means they pay tax on that money at lower capital gains rates instead of at ordinary tax rates.

In that same vein, Obama could revive his call from his 2012 SOTU for the Buffett Rule that would impose a minimum tax on wealthy Americans. Since wealthier Americans tend to get a large part of their income from investments, they tend to primarily pay lower capital gains rates.

And continued concern about companies changing their international tax residency, at least on paper, could again prompt Obama to call for an end to tax laws that enable corporate inversions. He's already characterized such business tax techniques as "gaming the system."

But don't expect much more in the way of tax talk tonight.

Bingo! If you just can't bear the idea of watching a presidential address with minimal mention of taxes, you might want to play the popular political bingo game that Americans for Tax Reform has created for Obama's final SOTU.

As with similar games, such as the drinking ones played during presidential primary debates, you download the series of Bingo cards and then check off terms and phrases that Obama uses tonight.

Since the Washington, D.C.-based group focuses on preventing new taxes or hikes to existing one, the cards' translation key puts a tax spin on otherwise neutral terms.

The Los Angeles Times has devised a SOTU Bingo card with actions instead of words from the speech.  

And The Washington Post's Monkey Cage political blog has a do-it-yourself SOTU Bingo card. "Tax" is one of the suggested words to include. But for the reasons I mentioned earlier, if you want to win the game, I wouldn't.

You also might find these items of interest:

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The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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