How did they think this was a good plan? Luckily they’ve dropped it. What does it say about Obama that even Nancy Pelosi thought this was a bad idea?

Bernie Becker of The Hill reports.

Obama scraps plan to tax college accounts

President Obama is scrapping his proposal to tax withdrawals from a popular savings account for college expenses, after facing sharp criticism from both Republicans and outside groups, a White House official said Tuesday.

The president’s plan to overhaul the so-called 529 accounts was just one part of his broader plan to raise taxes, mostly on the wealthy, to help expand incentives for higher education.

But the White House found itself on the defensive after Republicans latched on to the 529 proposal to accuse the president of raising taxes on the middle class, hurting its ability to make a case for the president’s broader plan.
“Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the president’s broader package of tax relief for childcare and working families, paid for by eliminating the trust fund loophole and making sure the wealthy pay their fair share,” a White House official said Tuesday.

Obama made the decision to drop the proposal, which was first reported by The New York Times, at the urging of senior Democrats including House Minority Leader Nancy Pelosi (D-Calif.) and Rep. Chris Van Hollen (D-Md.). Raising taxes on the accounts would have raised around a reported $1 billion — enough to pay for roughly 2 percent of the president’s plan to expand tax incentives for higher education for the middle class.