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.