Obama's State of the Union speech to call for tax code reform

U.S. President Barack Obama will propose a new tax code reform in his State of the Union address due on January 20, the White House said in a statement on Saturday.

According to the statement, Obama will lay out a new strategy to simplify tax code, eliminate tax loopholes and then use the revenue to fund new tax breaks for the middle class families.

In his Tuesday' s speech, the President will propose to reform tax rules on trust funds, to which the White House refers as "the single largest capital gains loophole" as it allows the wealthiest Americans to avoid taxes on their inherited assets.

The administration will raise the capital gains and dividends rates to 28 percent and propose a fee on the biggest financial firms, making it more costly for them to borrow heavily.

The new tax breaks mentioned in the statement include tripling the child-care tax credit, creating a new credit for families in which both spouses work, consolidate and expand education tax breaks, and make retirement savings program available to more people.

The administration said the tax increases will raise revenue by about 320 billion U.S. dollars over the next decade, while the new tax breaks and other initiatives will cost about 235 billion dollars. Endi