President Obama generated immediate controversy and backlash with one provision of his Middle Class Tax Fairness proposals, announced during the State of the Union address. That was the idea of taxing earnings in 529 plans, which proved so unpopular that the administration quickly dropped it.

It's interesting that so far there hasn't been much controversy around an even bigger idea in the same package – eliminating stepped-up basis on capital gains at death.

The president wants to replace stepped-up basis with: 1) a new personal exemption of $100,000 in capital gains at death, 2) no capital gains tax for married couples until the second death, 3) deferral of capital gains tax on family-owned and operated businesses (until sale), 4) a new option for closely held businesses to pay capital gains over 15 years after death, and 5) no tax on tangible personal property inheritances except "expensive art and similar collectibles."