684. O'Blunder Attacks the Middle Class Again!

O'Blunder (oh how I wanted to return to the anointed one's mistakes) spewed tons of malarkey at the State of the Union (No, I like most of you didn't waste time watching it). According to this article we, the Middle Class (however it is defined today -- varies depending on who uses it) -- need to be aware of a few things that Congress will again have to kill. For example, the elderly "would require estates to pay capital gains on appreciated assets. Hello, do you realize what this means?

Let me be brief. Today I buy a stock for $50 and when I die my estate realizes it $200. No problem for my beneficiary since the cost basis will be the step-up basis of $200. It he sells at $210, his gain is $10. 

Now O'Blunder's screwup: Again I buy at $50, die when it is $200, and beneficiary sells at $210. GOTCHA! The STEP-UP cost basis is being removed! It remains at $50 and the gain the beneficiary sees is $160! So, an additional $150 of capital gains tax is realized (1400% increase over today in this case). WAKE UP CALL people. Something doesn't smell right!

Oh, I am so glad I am old and will see $61+ increase to my taxes on O'Blunder's plans too! Bad enough the government cons you in believing your getting Social Security benefit for free when you give them a percentage of your dollars. Well, you aren't. Everything they pay in will mostly be taxed when you start collecting it! Didn't know that? Well, up to like 75% of your SS benefit receipts will be taxed WHEN YOU REALLY NEED IT! My advice, plan on that now and start saving elsewhere (Roth accounts preferably, or 401Ks that can be converted to IRA and Roth later).

I do like that Mr. Egan alludes to " the center added an average $19 tax bill to everyone in that bracket to account for a tax on banks, which ultimately is borne by all Americans." This should make you aware that ALL TAXES are NOT directly imposed on you and are HIDDEN! You get nothing for nothing folks.