There is much talk about the country going off the “fiscal cliff” at the end of the year. We have all heard about tax increases, tax rate changes, entitlement reform and how these will or will not affect federal budgets and deficits. But as an example, what might it do to an individual family?
You are now in your mid-80s. What a blessing of a life you have lived! After the great World War, you left the Navy and decided to make your home in San Diego. You went to college, got a job in that new industry called aeronautics. You bought a house in the quaint military neighborhood of Point Loma, got married and you and your wife started a family. You both worked hard. From the very start you understood the importance of saving money — your parents had survived the Great Depression. You knew you needed to put away for a rainy day, both for your kids’ college and for your retirement.
Every time you received a raise or bonus, you put it into investments. First you bought some stock; perhaps a little Sony stock that those Japanese were trying to sell you when you were stationed there. Wow! Wasn’t that a great bit of fortune! You only bought a few thousand shares but it turned into more than $300,000.
A little later someone suggested you buy the house your neighbor was selling and use it as a rental. It was tough making two mortgage payments but you and your wife did it by learning to do all the repair work yourselves. Eventually, you bought a couple of more houses. Working 50 hours a week at your job and then spending your weekends keeping up the other properties was challenging but you and your wife knew you were living the American dream. What a great time was had, when finally after all those years, the mortgages were burned.
After more than 50 years of hard work and savings, you have stock investments worth just over a million and half dollars — you are sure glad you listened to your boss when he suggested to buy some Qualcomm stock. You should have listened when he advised you to buy Apple stock as well but that sure was a funny name for a company. Grateful for your son too, who told you to sell those four houses and buy that 20-unit apartment project. It now has equity of about $1.6 million. Add the current home and you and the wife are worth about $3.5 million.
You never spent much on the kids, just the essentials. Paid their way through college and gave each a little money for a down payment on their homes. You didn’t start with much but after working hard all these years, you certainly want to leave what you worked so hard for to your four kids and six grandchildren. With the cost of college now well over $150,000, it will take more than a third of what you have just to provide a college fund for the grandchildren. Another third for state and federal taxes and that leaves just about a million to be divided among the children: $250,000 per kid. Not bad, but it sure doesn’t buy what it used to.
This is a happy scenario for many octogenarians, but only if they die by the end of year. If it’s one day later though, sunshine turns to rain, joy to sorrow.
Our current government majority believes that what so many have worked their lives to build up, now belongs to others. Beginning Jan. 1, the government is proposing that it get to take at least 50 percent of any moneys you want to leave to your heirs. That’s right, taking 20 to 30 percent of what you have is not enough, they want a good half. You see, in today’s America that money must be redistributed, firstly to the government which has an insatiable appetite for wasting money, and secondly to some other people who are happy to be beneficiaries of the government’s generosity with your money.
We should all send our octogenarians a thank you card for their hard work during their long lives, but more importantly for their “contribution” to the government’s well-being. We wish them continuous good health. Or perhaps not!
Jon Edney is a former El Centro city councilman.
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