The White House says it's dropping a proposal to scale back the tax benefits of 529 college savings plans amid backlash from both Republicans and Democrats. President Obama made his proposal to take away tax-free withdrawals from 529 plans as part of his State of the Union address. Resistance from Congress was swift. Republicans publicly criticized the plan, and aides said House Minority Leader Nancy Pelosi pushed senior administration officials to drop it. The Obama administration said all the additional tax revenue would have been used to help expand and make permanent a $2,500 tax credit that families can use for education expenses. The White House said Obama's proposal to scale back the tax benefits for savings plans was a small part of his overall plan to cut taxes for the middle class and to make college more affordable. But despite best intentions the plan adversely affected Americans on Main Street, not just the super-rich.
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