Surprise: investors shifting resources to avoid tax hikes next year

posted at 9:21 am on December 11, 2012 by Ed Morrissey

Remember the difference between static and dynamic tax analysis?  The former posits that tax changes produces no change in market behavior, so that hiking taxes by 10% gets you 10% more in revenue.  The latter assumes that changes in tax codes forces markets to adapt, so that rate hikes risk lowering revenues, and lowering rates in certain ways can produce a better revenue stream, especially over the long run.  Republicans favor the latter analytical method, while Democrats insist that tax cuts “cost” revenue opportunities and cause deficits.

Which is correct?  Well, the Washington Post reports on a lot of dynamic activity in advance of the fiscal cliff:

As lawmakers struggle to agree on a plan to avert the series of tax increases looming next year, many investors are taking preemptive action to get out of harm’s way.

Americans are moving to sell investment homes, off-load stocks, expand charitable donations and establish tax-sheltering gifts before the end of the year. Financial advisers and accountants say people are trying to avoid the higher taxes that will take effect in 2013 if Washington does not avert the “fiscal cliff.”

For the nation’s top earners, who as a group make a large share of their incomes through investment returns, those moves could have a major impact on their tax bills.

“We are seeing a lot of questions about what assets to sell,” said Debbie Haines, a partner at CST Group, a Reston accounting firm. “A lot of people are wanting to liquidate stocks that have a gain. A lot of people are harvesting their capital gains. There is also some concern that itemized deductions will be cut, and some people who are charitably inclined are thinking about making bigger donations this year.“

Also, with the tax laws covering gifts set to tighten significantly, several Washington area estate lawyers say they are facing a rush of people interested in establishing trusts that under current law allow a couple to protect more than $10 million in assets from the tax man. Impending changes in the law could reduce the gift exclusion to $1 million for an individual or $2 million for a couple.

Of course, the Washington Post isn’t exactly a newcomer to dynamic analysis.  On Friday, the Associated Press reported that the Post has decided to pay dividends this year instead of next to shield investors from the fiscal cliff:

The Washington Post Co. will pay its 2013 dividends before the end of this year to try to spare investors from anticipated tax increases.

The media and education company said Friday that its dividend of $9.80 per share is payable Dec. 27 to shareholders of record as of Dec. 17. The payout is instead of regular quarterly dividends next year.

Washington Post is the latest company to move up its quarterly payout or issue a special end-of-year payment to protect investors from potentially having to pay higher taxes on dividend income starting in January.

All of this comes in advance of the tax hikes that everyone is pretty sure will be coming.  What will happen when those rate hikes take place — especially on capital gains, which drive later investment?  Investors will be less willing to turn over that capital, since they will pay a higher price in taxes while the risk either remains the same or gets worse on putting the capital into new investments.  The wealthy will seek more shelter rather than investment opportunities.

As the Post reports in its article, the people who don’t have that kind of flexibility are the middle- and working-class earners, whose income comes solely from wages earned by the opportunities driven by risk-taking behavior.  Not only will that mean higher taxes, but fewer opportunities to earn money thanks to the depressing impact of tax hikes, which at the same time won’t deliver the kind of revenues promised by their proponents because of the market-behavior changes that even the Post demonstrates.

Dynamic analysis in this case predicts stasis in the Obamanomics stagnation.


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Dynamic analysis in this case predicts stasis in the Obamanomics stagnation.

But as long as we’re being “fair”, everything will be fine.

Doughboy on December 11, 2012 at 9:26 AM

Americans are moving to sell investment homes, off-load stocks, expand charitable donations and establish tax-sheltering gifts before the end of the year. Financial advisers and accountants say people are trying to avoid the higher taxes that will take effect in 2013 if Washington does not avert the “fiscal cliff.”

You would think the smart money would bet on the GOP caving as usual.

sharrukin on December 11, 2012 at 9:29 AM

Oh come on Ed, we have to be “fair”.

tim c on December 11, 2012 at 9:29 AM

That’s OK. We’ll just borrow the difference to make up for the loss of revenue – Lib Logic

HotAirian on December 11, 2012 at 9:31 AM

The sad little king of a sad little hill.

The math is coming and hell is coming with it.

Bishop on December 11, 2012 at 9:31 AM

LOL….hard to believe people want to keep their money ….ain’t it

Aggie95 on December 11, 2012 at 9:31 AM

I can say with certainty that many investors are triggering built-in gains in their investments this year in order to avoid tax hikes next year.

As an attorney who often helps clients structure things in a tax-efficient manner, it really is an odd thing to see people intentionally trigger taxable gains. We’re being asked to do “unnatural acts” that we’ve never done intentionally before, like blowing the tax-free reorganization rules.

It’s like intentionally stepping on land mines that you know are there. The incentives being created are truly perverse.

Doodad Pro on December 11, 2012 at 9:31 AM

while Democrats insist that tax cuts “cost” revenue opportunities and cause deficits.

Using this logic a 100% tax rate would cost nothing and would create no deficit. Of course this is liberal logic …

darwin on December 11, 2012 at 9:33 AM

Remember the difference between static and dynamic tax analysis?

NOPE! Full speed ahead!
-Obama/Democrats.

Gatsu on December 11, 2012 at 9:35 AM

Taxing The Rich More Will Backfire On The Middle Class
http://news.investors.com/ibd-editorials/121012-636560-nonrich-will-suffer-from-taxing-the-rich.htm

Appearing on CNBC on Monday, Ex-New York Democratic state politician Richard Brodsky trotted out his party’s class-warfare-based fiscal cliff talking points.

…..after which Brodsky instantly admitted that raising taxes on the highest incomes “is not gonna dig us out alone.”
Debating Brodsky, Euro Pacific Capital CEO Peter Schiff provided a sorely needed dose of realism: The successful — all those miserable Scrooges who provide tens of millions of Americans with their livelihoods — are already taxed far, far beyond any sane definition of “fair.”
“You know what the wealthy are going to do?” he asked. “They’re going to invest more abroad. They’re not going to work as hard.”
As a result, “they’re not going to pay as much in taxes” and “they’re not going to employ as many people.”

Those who favor soaking the rich should be prepared for what happens next. When Democrats find they have nowhere near the cash the government demands, they, the nonrich, will get soaked, too.

You have to figure that the slugs in the WH have to be laughing at the useful idiots when they are cloistered away from their media minions.

They sometimes have to be thunderstruck that the dumb masses buy into the arbitrary ‘just ream the top 2%’ meme.

They know that it’s not going to stop with just the 2% – but they play their little class warfare game just to get the majority of the dumb masses to buy into the immorality of the wealth redistribution scam.

Galt2009 on December 11, 2012 at 9:36 AM

That’s OK. We’ll just borrow the difference to make up for the loss of revenue – Lib Logic

HotAirian on December 11, 2012 at 9:31 AM

They’ll need to come up with new ways to get that money from those evil rich people. First they’ll hike taxes even higher on their income. Same with capital gains. Then a wealth tax. That’s the problem when the Dems’ tax policies don’t produce the revenue intended. They never admit they were wrong. They just insist on even more tax hikes.

Doughboy on December 11, 2012 at 9:36 AM

All of this comes in advance of the tax hikes that everyone is pretty sure will be coming. What will happen when those rate hikes take place — especially on capital gains, which drive later investment? Investors will be less willing to turn over that capital, since they will pay a higher price in taxes while the risk either remains the same or gets worse on putting the capital into new investments. The wealthy will seek more shelter rather than investment opportunities.

Hoocoodanode?

Robert_Paulson on December 11, 2012 at 9:38 AM

And we have Obamacare taxes to look forward to, as well… I am so looking forward to 2013../sarc

Static21 on December 11, 2012 at 9:39 AM

I don’t understand why people want to keep the money they’ve earned. That’s really strange.

Weight of Glory on December 11, 2012 at 9:39 AM

All of this comes in advance of the tax hikes that everyone is pretty sure will be coming. What will happen when those rate hikes take place — especially on capital gains, which drive later investment? Investors will be less willing to turn over that capital, since they will pay a higher price in taxes while the risk either remains the same or gets worse on putting the capital into new investments. The wealthy will seek more shelter rather than investment opportunities.

Yes, but Ed – that will cease as soon as the crisis is past – Then the rich will ignore the theft of their property and just invest and achieve for the common good because the patriotic thing to do yada… yada … yada ..
.

.
yeah sure, just keep dreaming Leftists..

Galt2009 on December 11, 2012 at 9:42 AM

I am sure that no liberal making over $ 200,000 a year is going to use any of the methods mentioned in this article to avoid paying higher taxes because liberals are so good and love to pay higher taxes…

Do I need the sarcasm tag?

mnjg on December 11, 2012 at 9:42 AM

2013 is stacking up to be a bad year. A lot of small businesses that have been treading water for the last four years will go under.

Thank you 51%.

Curtiss on December 11, 2012 at 9:42 AM

And the Washington Post and Costco supported Dear Liar.

rbj on December 11, 2012 at 9:43 AM

And we have Obamacare taxes to look forward to, as well… I am so looking forward to 2013../sarc

Static21 on December 11, 2012 at 9:39

AM

Don’t worry – people will always work harder when they are punished for doing so/Lefty logic.

Galt2009 on December 11, 2012 at 9:43 AM

The sad little king of a sad little hill.

The math is coming and hell is coming with it.

Bishop on December 11, 2012 at 9:31 AM

Math can be brutal.

Curtiss on December 11, 2012 at 9:45 AM

Laffers curve feeling pretty heavily weighted towards the low end of the revenue stream.

Speakup on December 11, 2012 at 9:45 AM

December Report: Small-Business Owner Confidence Plunges More than Five Points

One of the lowest optimism readings in survey history

The NFIB Small Business Optimism Index dropped 5.6 points in November, bottoming out at 87.5. The two major events in November were the national elections and Hurricane Sandy, which devastated parts of the East Coast. To disentangle these, the results for the states impacted by Sandy were excluded from the computation for comparison. When separating the hurricane-impacted states from the remainder, the data makes clear that the election was the primary cause of the decline in owner optimism.

“Something bad happened in November—and based on the NFIB survey data, it wasn’t merely Hurricane Sandy. The storm had a significant impact on the economy, no doubt, but it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline in small-business confidence.

“Nearly half of owners are now certain that things will be worse next year than they are now. Washington does not have the needs of small business in mind. Between the looming ‘fiscal cliff,’ the promise of higher healthcare costs and the endless onslaught of new regulations, owners have found themselves in a state of pessimism. We are forced to ask: is this the new normal?” — NFIB chief economist Bill Dunkelberg

Akzed on December 11, 2012 at 9:46 AM

Remember the difference between static and dynamic tax analysis?

“The what? Isn’t that…uh…FAIRNESS!”

-Bark

Bishop on December 11, 2012 at 9:46 AM

The Washington Post Co. will pay its 2013 dividends before the end of this year to try to spare investors from anticipated tax increases.

…how UN-patriotic….don’t they care about the poor people.

Typical of a liberal bastion like the Washington Post to bust their a$$’s to avoid the disastrous results of the very same policies they have spent years championing.

Baxter Greene on December 11, 2012 at 9:50 AM

Republicans favor the latter analytical method, while Democrats insist that tax cuts “cost” revenue opportunities and cause deficits.

Evidently Democrats think we’re all idiots that need them to lead us by the nose.

sadatoni on December 11, 2012 at 9:51 AM

Don’t forget inflation:

Sometimes Government’s Biggest Tax Bite Is Out Of Poor
http://news.investors.com/ibd-editorials-on-the-right/121012-636517-governments-steal-through-inflation.htm

One of the biggest, and one of the oldest, taxes in this latter sense is inflation. Governments have stolen their people’s resources this way, not just for centuries, but for thousands of years.

Hyperinflation can take virtually your entire life’s savings, without the government having to bother raising the official tax rate at all. The Weimar Republic in Germany in the 1920s had thousands of printing presses turning out vast amounts of money, which the government could then spend to pay for whatever it wanted to pay for.

Of course, prices skyrocketed with vastly more money in circulation. Many people’s life savings would not buy a loaf of bread. For all practical purposes, they had been robbed, big time.

Oh look at the pretty trillion dollar coins! /Dumb masses.

Galt2009 on December 11, 2012 at 9:52 AM

Typical of a liberal bastion like the Washington Post to bust their a$$’s to avoid the disastrous results of the very same policies they have spent years championing.

Baxter Greene on December 11, 2012 at 9:50 AM

Who benefits from that? Oh yeah, Warren Buffett…who owns about 17% of WaPo. Warren is such the typical liberal, hypocritical sleezeball.

HumpBot Salvation on December 11, 2012 at 9:53 AM

Who benefits from that? Oh yeah, Warren Buffett…who owns about 17% of WaPo. Warren is such the typical liberal, hypocritical sleezeball.

HumpBot Salvation on December 11, 2012 at 9:53 AM

..you got that right.

…..and you can throw Jeffery Immelt…Obama’s job Czar (and one of the biggest outsourcer of jobs at GE) right in there with him….

Got to love this quote by him the other day:

http://www.weeklystandard.com/blogs/immelt-communist-china-works_665280.html

“China is changing,” said CBS host Charlie Rose. “It may be being stabilized as we speak. What does that mean for China and what does it mean for the United States? Should it change expectations?”

“It is good for China,” said Immelt. “To a certain extent, Charlie, 11 percent is unsustainable. You end up getting too much stimulus or a misallocation of resources. They are much better off working on a more consumer-based economy, less dependent on exports. The one thing that actually works, state run communism a bit– may not be your cup of tea, but their government works.”

……The White House is full of Marxist and the majority of this country is to stupid to throw them out.

Baxter Greene on December 11, 2012 at 10:00 AM

I have a Ginger Dollar in my safe, I’ll copy some of them off for all of you to use.

Bishop on December 11, 2012 at 10:02 AM

Math can be brutal.

Curtiss on December 11, 2012 at 9:45 AM

Math is racist. So are computers.

Archivarix on December 11, 2012 at 10:03 AM

I can say with certainty that many investors are triggering built-in gains in their investments this year in order to avoid tax hikes next year.

As an attorney who often helps clients structure things in a tax-efficient manner, it really is an odd thing to see people intentionally trigger taxable gains. We’re being asked to do “unnatural acts” that we’ve never done intentionally before, like blowing the tax-free reorganization rules.

It’s like intentionally stepping on land mines that you know are there. The incentives being created are truly perverse.

Doodad Pro on December 11, 2012 at 9:31 AM

Ditto from this accountant in Miami – busiest November and December ever for tax planning – and it’s reverse tax planning!

Ann on December 11, 2012 at 10:04 AM

It isn’t about increasing revenues. It’s about making the rich pay their fair share. ™

The Rogue Tomato on December 11, 2012 at 10:04 AM

Democrats are imbeciles, their understanding of economics rivals that of the owners of the Goose that lays the golden Eggs in the legendary Aesop’s fable, who erroneously assume that the Goose must have a supply of gold inside it’s body, so in order to collect all the gold at one time instead of waiting for the goose to lay it’s eggs one at a time, kill the goose, only to discover that the goose is just like any other goose on the inside3, and that their previous supply of golden eggs disappears with the gooses death.

Arthur Laffer, the American economist whose equations on tax rates and their correlation to generated revenue produced what is known as the Laffer curve, which demonstrated that the maximum effective revenue generating rate of taxation was 17.5 percent, and that any rate of taxation beyond 17.5 percent produces a revenue stream of diminishing returns. The greater the rate beyond 17.5 percent the faster and more the decline in generated revenue that it produced.

SWalker on December 11, 2012 at 10:09 AM

Looking forward to the outrageous outrage when taxes go up on the 2% and absolutely nothing changes for the 98%.

ctmom on December 11, 2012 at 10:23 AM

Looking forward to the outrageous outrage when taxes go up on the 2% and absolutely nothing changes for the 98%.

ctmom on December 11, 2012 at 10:23 AM

Ah, so you are into delusions and fantasies eh. Look around you, the economy is in the crapper, unemployment, real unemployment, not the fictional rate that the Obamanation Administration is touting is at 19.7 percent.

SWalker on December 11, 2012 at 10:32 AM

Looking forward to the outrageous outrage when taxes go up on the 2% and absolutely nothing changes for the 98%.

ctmom on December 11, 2012 at 10:23 AM

You mean until taxes go up on the 98% bcuz da’ gubmint got far less than they anticipated getting from the 2%.

stukinIL4now on December 11, 2012 at 10:36 AM

“Damn it! Hold still when I’m trying to beat you up.”

BobMbx on December 11, 2012 at 10:40 AM

Looking forward to the outrageous outrage when taxes go up on the 2% and absolutely nothing changes for the 98%.

ctmom on December 11, 2012 at 10:23 AM

If nothing will happen to the 98%, why does something need to be done to the 2%, for the benefit of the 98%?

What will be accomplished?

BobMbx on December 11, 2012 at 10:41 AM

I don’t understand why people want to keep the money they’ve earned. That’s really strange.

Weight of Glory on December 11, 2012 at 9:39 AM

I sense sarcasm.

BobMbx on December 11, 2012 at 10:44 AM

SWalker on December 11, 2012 at 10:32 AM

My point is that the 98% are being led to believe that all their troubles will be over if only the 2% got taxed ” a little bit more”.

stukinIL4now on December 11, 2012 at 10:36 AM

Exactly, higher taxes on the other guy is just fine.

BobMbx on December 11, 2012 at 10:41 AM

Nothing is accomplished except revenge on the evil greedy rich people. At least until the sh*t hits the fan.

ctmom on December 11, 2012 at 10:49 AM

My, look at all of those greedy, ‘un-generous’ citizens (to paraphrase the Paris mayor regarding Gerard D’s choice to move out of the country).

Goodness me, no one could’ve predicted this kind of behavior, except, you know – everyone with a brain that has been predicting it since the beginning of time, proven correct every f-ing time.

But leftists a) are too stupid to ever get it, or b) don’t care, because destroying the economy and the middle class and making more proles dependent upon the government is the plan, not an unexpected outcome.

Midas on December 11, 2012 at 10:50 AM

I can only hope that the Dems are paying close attention. ( I can wish, no?)
Money is simply not going to sit around waiting to be plucked.

That $80 billion annual increase they believed in just shrank to less than 60. And will decrease yet more.
Dems are wasting incredable political capital on this and will end up with nothing to show for it.

Jabberwock on December 11, 2012 at 10:51 AM

Looking forward to the outrageous outrage when taxes go up on the 2% and absolutely nothing changes for the 98%.

ctmom on December 11, 2012 at 10:23 AM

You must be one of the newer clueless f@#$s, don’t recognize the name. Not any smarter than the other nitwit libs apparently, but welcome nonetheless.

Please, let’s resume this conversation in February after the 98% have a full month to see what happens to their paychecks, their insurance, their jobs, etc.

Midas on December 11, 2012 at 10:53 AM

SWalker on December 11, 2012 at 10:32 AM

My point is that the 98% are being led to believe that all their troubles will be over if only the 2% got taxed ” a little bit more”.

ctmom on December 11, 2012 at 10:49 AM

Ahhh… Sorry, missed the sarcasm…

SWalker on December 11, 2012 at 10:57 AM

Midas on December 11, 2012 at 10:53 AM

A bit harsh on ctmom. Not a lib.

Point was that tax hike on rich will do nothing for 98%.
Of course, you are correct to point out that things will probably get worse.

Jabberwock on December 11, 2012 at 11:01 AM

Midas on December 11, 2012 at 10:53 AM

Dude, I’ve probably been here longer than you, way back when Michelle was the boss.

Like I said, nothing will change for the 98%. The extra $2000 they are expecting won’t miraculously appear in their paychecks (if they are even working), new jobs won’t appear, the debt will still be $1.6T and a huge burden for our children. They’ll “feel” better because Obama screwed the rich, but they’ll be outraged because the rich will still be standing and they’ll be no better off.

ctmom on December 11, 2012 at 11:10 AM

Obama: America on Hold.

tech_sass on December 11, 2012 at 11:11 AM

Jabberwock on December 11, 2012 at 11:01 AM

Thx.

ctmom on December 11, 2012 at 11:13 AM

Surprise?

I took every penny of my LTCG (Long Term Capital Gains) showing a profit to reset my basis upward at a 15% tax rate for the profit… and I’m moving my investments to places where I’m ok leaving them for 15-20 years if need be when those rates get jacked.

I’m now under the impression that I won’t want to be taking any more LTCG income while I’m employed to avoid paying a 30%+ rate on that income; and it’ll be years maybe decades before someone realizes the market is in lockdown and could provide a lot more revenue if they’d put things back.

That or I’ll wait until I retire and take $20K-$40K profits per year and live off that (and pay under 20% on that as my only income).

Why pay 40% now when you can pay 20% later? I don’t need the money to live on, that’s why I have a job… if you’re going to penalize moving money drastically, I’ll quit moving money.

What did you think I’d do?

gekkobear on December 11, 2012 at 11:24 AM

One of my very high net worth, liberal clients famouly signed a “Please tax me more” letter to the president a few years ago. I see he is now selling off a number of his companies before year end – likely to avoid the increase cap gains tax.

LilyBart on December 11, 2012 at 11:27 AM

ctmom, humble apologies; combination of misundertanding your meaning and being in a bit of a mood this morning (literally having just had a conversation in person with someone joyous over the thought of taxes going up on ‘the rich’ and that ‘the rest of us’ were going to be better off as a result).

Again, my apologies.

Midas on December 11, 2012 at 11:33 AM

Shift! Withdraw! Decline! Protection! Remove! Gone!!!

Bmore on December 11, 2012 at 11:33 AM

Oh, Done!!!

Bmore on December 11, 2012 at 11:34 AM

That or I’ll wait until I retire and take $20K-$40K profits per year and live off that (and pay under 20% on that as my only income).

Why pay 40% now when you can pay 20% later?

gekkobear on December 11, 2012 at 11:24 AM

Makes sense; however, I’m not at all optimistic that the rates will be what you think they’ll be when we pull our retirement money out and it becomes taxable. My presumption is that either a) the rate will be *much* higher, or b) those tax-deferred retirement funds will be nationalized before then, replaced with a new/improved IOU/single-payer/government pension plan – that will likely be bankrupt as well.

I’m half tempted to liquidate at least some of my tax-deferred retirement funds now, take the hit, and… well, just a complete rethink of it all.

Midas on December 11, 2012 at 11:39 AM

One of my very high net worth, liberal clients famouly signed a “Please tax me more” letter to the president a few years ago. I see he is now selling off a number of his companies before year end – likely to avoid the increase cap gains tax.

LilyBart on December 11, 2012 at 11:27 AM

ROFL

Midas on December 11, 2012 at 11:40 AM

Why Democrats ignore the dynamic analysis is beyond me.

After all, it is they that love to tax vices like soda, cigarettes, gas, carbon, ammo, etc. to get us to change our behaviour.

People like to keep their money and will do whatever it takes. Just look how hard the Federal government is trying to get their slice of our pie!

SPCOlympics on December 11, 2012 at 11:44 AM

Midas on December 11, 2012 at 11:33 AM

No problem. I blame twitter and trying to say everything in 140 characters or less.
;-)
Jeebus, call me anything but not a lib!

ctmom on December 11, 2012 at 11:46 AM

Jeebus, call me anything but not a lib!

ctmom on December 11, 2012 at 11:46 AM

I sincerely, humbly, and unreservedly apologize for insulting you in such a senseless and egregious manner. I don’t expect you to forgive me, but perhaps someday, when the pain has faded with time, your descendants will.

Midas on December 11, 2012 at 11:50 AM

Why should the Democrats care? When things go to hell, the ignorant public will blame the Republicans. That is the bitter truth.

zoyclem on December 11, 2012 at 11:55 AM

This is so stupid I can’t believe it is happening. You can fool some of the people some of the time and some of the people all of the time. The American electorate has proven that our demographic shift has resulted in creating a new American majority in the category of “fooling some of the people all of the time”.

Any moron knows that raising taxes always reduces revenue. Lowering taxes always produces more revenue because of the expanding economy that follows. Those carney clowns in Washington all know that an expanding economy is the only way to significantly increase revenues, but here we are on some stupid crusade for “fairness” that won’t achieve squat. Whats worse is they seem to be intentionally keeping the economy down with all the ridiculous continued uncertainty.

My only conclusion is that the powers at be are intentionally keeping the economy down for some dark reason.

saiga on December 11, 2012 at 12:19 PM

But this can’t be true. The sage of Omaha said so. He said taxes have NOTHING to do with how people invest their money.

And he’s rich. And Democrat. So he must be right.

ramrants on December 11, 2012 at 12:44 PM

See the Google swine, with deep apologies to the clean pigs.

Schadenfreude on December 11, 2012 at 12:46 PM

gekkobear on December 11, 2012 at 11:24 AM

I agree with your strategy, with one exception. You are making the assumption that the rule of law holds. It does not. If you have the capability, I would suggest that a part of your assets go black. Convert it to cash, and then covertly into some other store of value held outside the jurisdiction of the US government. A bolt hole with a supply of “start over” money for you and yours may be the best investment you can make. You may not be rich if you have to run, but you will be in better shape than most trying to start over.

Subotai Bahadur

Subotai Bahadur on December 11, 2012 at 1:00 PM

The math is coming and hell is coming with it.

Bishop on December 11, 2012 at 9:31 AM

“Get ready Little Lady. Hell is coming to breakfast,” Chief Lone Watie

Tenwheeler on December 11, 2012 at 1:28 PM

That or I’ll wait until I retire and take $20K-$40K profits per year and live off that (and pay under 20% on that as my only income).

Why pay 40% now when you can pay 20% later?

gekkobear on December 11, 2012 at 11:24 AM
Makes sense; however, I’m not at all optimistic that the rates will be what you think they’ll be when we pull our retirement money out and it becomes taxable. My presumption is that either a) the rate will be *much* higher, or b) those tax-deferred retirement funds will be nationalized before then, replaced with a new/improved IOU/single-payer/government pension plan – that will likely be bankrupt as well.

I’m half tempted to liquidate at least some of my tax-deferred retirement funds now, take the hit, and… well, just a complete rethink of it all.

Midas on December 11, 2012 at 11:39 AM

Don’t forget, on top of the income taxes you’ll also be paying higher Capital Gains taxes on what your retirement money earns between now and then unless it is all pension.

Tenwheeler on December 11, 2012 at 1:32 PM

Its over.

Bmore on December 11, 2012 at 1:33 PM

The sad little king of a sad little hill.

Bishop on December 11, 2012 at 9:31 AM

Formerly known in a galaxy now far far away as the shining city upon a hill.

TxAnn56 on December 11, 2012 at 1:38 PM

Big street is gonna drive a rally for the next week and a half and then get the hell out. Then will watch it drop like a lump of coal.

Merry Cliffness indeed.

FlaMurph on December 11, 2012 at 2:29 PM

The last time we went to this expiration thing, a company I have stock in (not publicly traded) decided to try and beat the presumed expiration of the qualified dividend treatment and put out a dividend in December rather than January or later. Although the company has not mentioned it, it is possible it will do it again.

People and Companies are not stupid. The tax bite may be unavoidable but, where they can, they will try to minimize its effects as far as they legally can.

So in real life, people react to stimuli and adjust accordingly (where they can). Static assumptions presume that they don’t.

Russ808 on December 11, 2012 at 3:04 PM

“Surprise: investors shifting resources to avoid tax hikes next year”

It’s amazing to me that so many on the right don’t understand that this is exactly what Obama wants to happen.

Look, the Repubs are simply going to let the Bush tax cuts expire. Then, new tax legislation will be passed to offset the increase to middle income earners. Republicans will go along with it because “lowering taxes for some is better than not lowering them at all”. So taxes are going up for the those making $200K. Period.

So when the economy – very predictably – falls back into recession because of the decreases in investment and spending by upper income earners, what is it that Obama and the Dems are planning to do to deflect blame off of themselves for the mess? After all, they’re not going to be able to attack Republicans directly on the issue of the tax increase because the Dems will have gotten everything that they wanted – i.e., higher taxes on the “wealthy”, with no increase to the middle class.

So what then?

They’re going to directly attack “the rich”…then they will indirectly attack Republicans as the “defenders of the rich”. We saw them floating the first trial balloon of this strategy during the election when they were attacking Romney’s offshore accounts.

When the economy tanks, the “argument” Obama will use to deflect blame will be that the reason for the collapse has nothing to do with the tax increase that these “greedy rich people can easily afford to pay”. The reason will be that they are avoiding paying their fair share – and thus, hurting the economy – by “hiding their money” in overseas accounts…or using “loopholes” to hold onto their ill-gotten gains. So what will be necessary will be more taxes and to close down the avenues that “the rich” use to avoid paying their “fair share”. But to do that, guess what?…”We’ve got to get rid of those darned Republicans who stand in the way of us getting these greedy fat cats to pay their fair share!” If they’re successful and retake the House, they will completely choke off investment in this country because that will then set them up for pursuing what their real agenda is – not wealth redistribution, but wealth confiscation.

Remember: for the Left, poverty is OK…it’s wealth that is unacceptable.

Mark my words: if you thought the Dems were involved in class warfare in 2012, just wait until 2014.

rvastar on December 11, 2012 at 5:02 PM

Don’t be surprised if tax hikes are made retroactive to catch the “cheats.” And by “cheats,” I mean people operating under the given laws at the time to lower their tax burden legally.

At least, that would be the Democrat and media definition.

tom on December 11, 2012 at 5:15 PM