President Obama on Monday reiterated his push to extend the Bush Tax cuts for the middle class but not the 2% of U.S. households making more than $250,000.
"I believe it's time to let the tax cuts for the wealthiest Americans -- folks like myself -- to expire," President Obama said, adding "the American people are with me on this."
Indeed, numerous polls show the majority of Americans favor raising taxes on the "rich."
But millions of middle class Americans are at risk of higher taxes if no action is taken before Jan. 1, notes Josh Brown, vice president of Fusion Analytics and author of The Reformed Broker blog.
Specifically, Brown is concerned about the sharp rise in taxes on dividends and capital gains that will occur as part of the so-called fiscal cliff -- or "taxmageddon" if you prefer.
If Congress fails to act, the capital gains rate will rise to 23.8% next year from 15% today and dividend taxes will rise to as high as 43.4% from 15%, Brown says, citing analysis by the Americans for Tax Reform.
"If you're going to take a portfolio of blue chips that's got a decent 3%-4% yield and you're now going to triple tax on that income, it's double financial repression on tens of millions of boomers that are trying to cobble together a retirement," he says. "I don't hear a lot about how serious [Obama] is in terms of those Bush tax cuts, which are part of this fiscal cliff nightmare."
The "financial repression" Brown refers to is the near elimination of yields on CDs and Treasuries that's occurred in large part because of the Fed's zero interest rate policy.
"Things like CDs and Treasuries, mainstays of traditional retirement portfolio, have been rendered borderline worthless and almost dangerous," Brown says.
As a result, and because of longer life expectancies, most retirees are now investing in stocks more than has been historically recommended, he continues. "To now penalize [retirees] further as they're being forced out on the risk ledge just to make ends meet as it is..."
Brown doesn't complete the thought but it's clear he thinks it's bad politics and bad economics; that's especially true if the President is sincere about wanting policies that will "reclaim the security that so many middle-class Americans have lost over the past decade."