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Obama Seeks Tax Reforms

FILE - President Barack Obama speaks during a news conference in the Brady Press Briefing Room of the White House in Washington, Dec. 19, 2014.

U.S. President Barack Obama wants to raise taxes on the wealthiest Americans and the largest financial firms, which he says will strengthen the middle class.

The proposals, outlined in a White House press release, will likely not pass in the Republican-controlled Congress, but sets the stage to highlight the differences in the Democratic and Republican parties as the campaigning begins to rev up for next year's presidential election.

The president will announce the proposals Tuesday in his annual State of the Union address on Capitol Hill.

Obama says he wants to make sure the rich pay their fair share of taxes by closing the capital gains loophole on trust funds, which he says allows hundreds of billions of dollars to escape taxation each year.

He is also proposing to raise the top capital gains rate to 28 percent, which he notes was the rate decades ago under a conservative Republican president, Ronald Reagan.

The president also wants the biggest financial firms to pay what he says is their fair share of taxes by proposing a fee on those firms, making it more costly for them to borrow heavily.

While Republican leaders have said they share the president's desire to reform the nation's complicated tax code, they have long been opposed to many of the proposals the president will outline Tuesday. For example, most Republicans want to lower or eliminate the capital gains tax and similarly want to end taxes on estates, not expand them.

Obama wants the money from the wealthy citizens and financial firms to be placed into a series of measures aimed at helping middle-class Americans, including tripling the child care tax credit that would help 5.1 million families cover child care costs for 6.7 million children, and a new $500 second earner credit to help cover the additional costs faced by families where both spouses work, benefiting 24 million couples.

The president also wants to provide free tuition to students for two years of community college.