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President Obama will propose higher investment taxes in State of the Union

In his State of the Union address on Tuesday, President Obama will propose several plans that he says will boost the middle class. Some of those plans include o...

In his State of the Union address on Tuesday, President Obama will propose several plans that he says will boost the middle class.

Some of those plans include offering a $500 tax credit to couples who both hold jobs, raising the top child care credit to $3,000, and providing two free years of community college for students who qualify.

John Miller Sr., a financial adviser in Rock Island, said the President is trying to simplify the tax code and help the middle class in the process.

"I think the whole gist of what he's trying to propose is to try to reward the middle class, which really hasn't experienced the prosperity that the economy has provided for top earners," Miller said.

Those top earners are exactly who the President is counting on to pay for his plan, which is estimated to cost $235 billion.

In his speech, President Obama will propose raising the capital gains tax for the super-rich from 20 percent to 28 percent, impacting additional income from investments and assets.

It means if a wealthy American wants to sell an investment, they will be taxed 28 percent on that investment, as opposed to the 20 percent rule now.

"Generally the reaction to that is, 'we're being double taxed,'" said Miller. "The corporation is stock that you own, so that corporation is being taxed, and then the individual is being taxed again."

The top capital gains rate has already gone up from 15 percent to 23 percent during President Obama's time in office.

The President will also call on Congress to start taxing trust funds, which normally grow appreciation over time and aren't taxable until touched by the beneficiary.

In addition, President Obama will propose increasing taxes for larger financial institutions.

This will be the President's sixth State of the Union address but only his first facing a Republican majority in congress.

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