The major focus of Barack Obama’s state of the union address was economic equality and middle class prosperity. The policies for the promotion and expansion of opportunities for economic growth were the major focus of the Address. The president showed concern over a range of policy initiatives for the provision of security to working families. The major measures include lowering the taxes for working class, increased employment and education opportunities, development of training programs for workers and increased investment in infrastructure and energy sectors to create more job opportunities.
President emphasized the need to increase the capital gain and dividend tax rate for the redistribution purpose. In current American economic scenario the earned income is being taxed at a higher rate than investment income. In economic terms this is the major reason of inequality. In his State of Union address, President Obama touched the same reality and was rightly of the opinion that without dealing with the root cause of the problem of redistribution, economic recovery cannot contribute to engine of growth.
He said in his State of the Union address “we need a tax code that truly helps working Americans trying to get a leg up in the new economy, and we can achieve that together.”
He proposed higher minimum wage, called business units to come forward with more apprenticeship opportunities for workers and offered new retirement plans.
This is very right approach if we look at the facts about the American middle income families. Autor, Katz and Kearney (2008) observe that, the lower middle class comprises low skilled workers with stagnant wages. Almost half of these families rely on two earners to survive. And one of the challenges that they face is low return because of current tax structure and transfer programs.
Economists are of the view that human capital and