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Barack Obama’s State of the Union speech was pitched at middle-class American voters in the US election, as he pushed for millionaires to pay their fair share by ending tax breaks for the wealthy.

Barack Obama used his speech on Tuesday to press the case for a new minimum 30 per cent tax on Americans earning more than $1 million a year and for tougher treatment of corporations that move jobs out of the United States.

At the same time, he called for tax credits to lure jobs back to the United States.

In his highly populist State of the Union address, his third since coming into office, Obama repeatedly urged his Republican Party opponents in congress to pass laws that would help “nation building”, though it faces long odds in the deadlocked US Congress.

"Right now, companies get tax breaks for moving jobs and profits overseas," Obama said. "Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world."

Obama also made an extraordinary appeal for unity across the political divide by invoking the teamwork of the Navy SEAL commandos who killed al-Qaeda leader Osama bin Laden.

"All that mattered that day was the mission," Mr Obama said.

"No one thought about politics. No one thought about themselves.

"One of the young men involved in the raid later told me that he didn't deserve credit for the mission. It only succeeded, he said, because every single member of that unit did their job . . . every member of that unit trusted each other because you can't charge up those stairs, into darkness and danger, unless you know that there's someone behind you, watching your back.

"So it is with America."

In a speech that defended his record and laid the ground for a second term agenda if he wins the general election on November 6, Obama traced how he had inherited an economic crisis and yet conditions had improved over the past 22 months with the creation of three million jobs.

"The state of our union is getting stronger, and we've come too far to turn back now," he said.

For several years has called for steeper taxes on corporations' foreign profits and closing what he calls tax loopholes that also benefit multinational companies.

Most of these ideas have stalled for years in Congress.

This time, Obama is calling for a number of tax policies that could in theory appeal to Republicans, in the name of boosting the flagging economy. For example, he wants to trim tax rates for manufacturers and double a tax deduction for high-tech manufacturing – ideas that might gain some bipartisan backing.

But even that is unlikely in the current environment. "Tempted as they may be by more tax cuts, anything that smacks of a deal with Obama, or a victory for Obama, especially one that undercuts their theme – however detached from the reality – that Obama is a tax-increaser, will be reflexively resisted by Republicans in both houses," said Norm Ornstein, a congressional watcher at the conservative American Enterprise Institute.

Obama insists a millionaires tax would help trim the federal budget deficit, and highlighted comments by billionaire investor and supporter Warrren Buffett, who has lamented publicly that under the US tax system he pays a lower rate than his own rate than his secretary.

With Buffett's secretary seated in the audience, Obama said US tax reform should follow the Buffett rule.

"If you make more than $US1 million a year, you should not pay less than 30 per cent in taxes," he said.

To help homeowners, Obama urged congress to approve laws that would cut red tape, giving people a chance to save $US3000 a year on their mortgages with the chance to refinance.

The President contrasted the behaviour of Wall Street and ordinary people on "Main Street".

"Let's never forget - millions of Americans who work hard and play by the rules every day deserve a government and financial system that do the same," he said.

"It's time to apply the same rules from top to bottom: no bailouts, no handouts and no copouts. An America built to last insists on responsibility from everybody."

The White House today issued a seven-page blueprint titled Accompanying Mr Obama's third State of the Union address, entitled

"An America to last''. In it the President said the middle class faced a "make or break moment" to maintain the "basic American promise" that if its people worked hard they could do well enough to own a home, raise a family and save enough for retirement.

"Now, you can call this class warfare all you want," Mr Obama said in his address.

"But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

''We don't begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich.

"It's because they understand that when I get tax breaks I don't need and the country can't afford, it either adds to the deficit, or somebody else has to make up the difference like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet.

"That's not right. Americans know it's not right. They know that this generation's success is only possible because past generations felt a responsibility to each other, and to their country's future, and they know our way of life will only endure if we feel that same sense of shared responsibility.

"That's how we'll reduce our deficit. That's an America built to last."


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