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NEW YORK (MainStreet) — Following severe losses in the midterm elections, President Obama used his third State of the Union address to lay out a wish list of policies for the year to come, ranging from education investments to debt-reduction tactics, which he believes should be able to earn bipartisan support.

While many of the initiatives mentioned in the speech Tuesday were decidedly vague, several would undoubtedly have a big impact on consumers and small business owners if they are successfully passed. We’ve rounded up some of the highlights from the president’s hour-long speech so you know the new policies to expect from the 112th Congress.

Simplifying the Tax Code

Midway through his speech, President Obama briefly mentioned his desire to change the current tax code to make it easier for all Americans to understand.

“In fact, the best thing we could do on taxes for all Americans is to simplify the individual tax code,” the president said. “This will be a tough job, but members of both parties have expressed an interest in doing this, and I am prepared to join them.”

This led to some of the loudest applause of the night, from Republicans and Democrats alike, but what exactly does it mean?

According to previous statements that the president and others have made, the goal here is twofold. First, the Obama administration wants to stop special interest groups from manipulating loopholes in the tax code to “game the system,” which in turn robs the government of significant tax revenues. At the same time, the president’s goal is to make the tax system simpler so that the average American can better understand how the tax system works and ultimately stop dreading the process of filing returns.

Ending Bush-Era Tax Cuts

It’s barely been a month since the White House brokered a deal with Republicans to extend tax cuts on all Americans for another two years, including those households earning more than $250,000 a year, but President Obama was unequivocal about ending these tax cuts for the wealthiest Americans once and for all when they expire at the end of 2012.

“If we truly care about our deficit, we simply can't afford a permanent extension of the tax cuts for the wealthiest 2% of Americans,” Obama said. “Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break. It's not a matter of punishing their success. It's about promoting America's success.”

There’s no doubt this will spark another round of back-and-forth debates between those who think letting the tax cuts on wealthy Americans expire will hurt small businesses and those who think keeping these tax cuts will hurt our deficit.

But the more pertinent question for most Americans is what effect this policy change would have on our paychecks overall. For those households that fall in the wealthiest income bracket, ending these tax cuts could cost $7,500 or more each year. But if tax cuts on the middle class were to expire as well, the amount would be much less. The average American household, which earns roughly $52,000 a year, would lose $1,180 each year.

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Making the Education Tax Credit Permanent

When Congress approved the extension on the Bush-era tax cuts at the end of 2010, it also approved a valuable, but temporary, tax credit for families looking to send their children to college. Last night, the president called for Congress to make that tax cut permanent. If it did, it would certainly be good news for households across the country. By the White House’s own estimates, this tax cut would potentially save students as much as $10,000 for all four years of college.

Closing Small Biz Health Care Loophole

In the week leading up to the State of the Union address, the House of Representatives approved a largely symbolic measure to repeal the health reform package that had been passed the year before. But rather than entertain the idea of undoing his signature piece of legislation, President Obama instead urged Congress to focus its attention on tweaking the parts of the bill that don’t work.

As an example, he highlighted a loophole in the bill that has been hurting small businesses. “Let me be the first to say that anything can be improved,” Obama said. “We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses.”

The flaw in question is a measure in the bill that requires businesses to file 1099 tax forms each time they make purchases exceeding $600, adding an excess amount of paperwork. Many small business owners have since voiced their complaints about this part of the legislation.

Infrastructure Jobs

While the president did not spend much time focusing on the unemployment rate in this country, he did mention the need to create new jobs several times in the speech, most notably as part of his proposal to improve our nation’s infrastructure and boost career opportunities in the process.

“Over the last two years, we've begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. And tonight, I'm proposing that we redouble those efforts,” Obama said. “We'll put more Americans to work repairing crumbling roads and bridges. We'll make sure this is fully paid for, attract private investment and pick projects based [on] what's best for the economy, not politicians.”

It remains to be seen how much money can be invested in these projects, given the many legislators calling for government to cut down on spending projects, but if these policies do come to pass, it could mean more job opportunities for construction and manufacturing workers around the country.

Reducing the Deficit

Finally, the president devoted much of his speech to reducing the national deficit, which is arguably the primary cause for much of the Republican party. While his proposals were vague for the most part, Obama stated that his administration would call for a freeze on annual domestic spending for the next five years. This move, Obama said, would reduce the deficit by $400 billion during the next 10 years. Unfortunately, it will also result in significant cuts to government payrolls and programs in the near future.

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