A hot topic at BBQs this summer is the impact of Obama’s tax increases … the elimination of the so-called Bush tax rates and, now, the increased likelihood of the ObamaCare hits.
Back in the 70s — before Reagan — tax shelters were the rage … finding ways to transform ordinary income into lesser taxed capital gains and generate paper losses from generous depletion & depreciation allowances.
I’m sensing a return to the 70s mindset.
In the past couple of weeks, I’ve heard of or seen …
- A Maryland family plan to relocate to Northern Virginia to dodge Maryland’s increased sales, income and estate taxes.
- Five Maryland exec-families establishing primary residencies in Florida … to take advantage of Florida’s income and estate tax rates … according to CNBC, they’re a microcosm of rich fleeing MAryland
- Savvy investors talking about buying municipal bonds as a way of avoiding higher Fed income taxes … especially if dividends start getting whacked at ordinary income tax rates.
- People going across state lines and ramping up internet purchases … to minimize sales taxes
- Merchants and contractors encouraging payment in cash … sometimes with accompanying discounts … to get income “off-the-books”
Most of the tactics are completely legal.
My point: tax avoidance is becoming a popular sport … fed-up tax payers are starting to revolt.
Tax & spend politicos should take heed … their rosy tax hike projections might not materialize as planned.