Paul L. Caron

Sunday, April 11, 2010

Tax Planning for the Obama Tax Hikes

Forbes, The Obama Tax Hikes--What to Do, by Ashlea Ebeling:

Buy munis, book losses, avoid marriage, consider a Roth conversion now and get your Lasik eye surgery next year.


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Today during the last few minutes (@9:53am) of the Bloomberg Surveillance radio show, Ken Prewitt referenced this post.

Posted by: Pete | Apr 13, 2010 3:04:35 PM

Capital gains won't be a problem. I now have a lifetime supply of capital losses.

Posted by: Fat Man | Apr 12, 2010 6:17:31 PM

Roth conversions always struck me as a bad idea -- why pay tax on the income now, at your highest marginal rate while your income is high during your working years rather than pay tax on the money after retirement when your income will likely be significantly lower? Even if top rates are jacked way up by then, you're not likely to be in the top brackets in retirement anyway. And if there's a VAT by then? You're screwed either way.

Posted by: Slocum | Apr 12, 2010 5:52:30 PM

All the Dems seem to rave about the high marginal rates during the "golden years" of the 1960s and 1970s, when life is supposed to have been perfect because "the rich," meaning high-income earners rather than actual wealthy people, were subject to confiscatory tax rates (which they never paid because of individual shelters, etc.). Apart from all the other implicit falsehoods in this apology for covetousness, how about someone pointing out the level of income at which these so-called "fair" rates kicked in? If the top rate kicked in at $400,000 in 1960 dollars, that would be about $2,900,000 in today's dollars. Not exactly $250,000, but what's an order of magnitude among friends, right?

Posted by: Hi There | Apr 12, 2010 3:54:31 PM

Considering municipal balance sheets, I think buying muni's should be approached cautiously.

Posted by: C | Apr 12, 2010 3:39:35 PM

What to do to survive the looming Obama tax hikes? I’ll tell you the surefire best way to escape the theft:

1. Get elected as a Democrat to either the House or Senate.
2. Stop paying your taxes.
3. Coddle up to whatever special interest that promotes graft.
4. Support legislation that enhances your portfolio.
5. Keep a low profile, your mouth shut and your pants on (probably the hardest for a Democrat.)

Even if you get caught, at the very worst you’ll just have to pay back what you withheld from the IRS, with no interest, penalties or jail time. You also get gold plated heal thcare through the FEHBP, you don’t have to pay into Social Security, you enjoy taxpayer funded vacation opportunities, and you get a premium retirement plan to boot…what’s not to like?

Posted by: Forrest | Apr 12, 2010 3:29:12 PM

Or, if you're in the bottom 95%, do nothing, because you didn't get a tax hike.

Posted by: Evan | Apr 12, 2010 2:59:24 PM

I'm lucky compared to the useful idiots who have college kidz, teens, children and grand-children; useful idiot parents and grandparents voted their off-spring into a lifetime of Serfdom paying off all the 'health care' goodies, mortgages, student loans and gas.

The useful idiot parents and grandparents are stupid enough to give me the right to suck every bit of life out of their offspring I am going to partake of this 'right' just because the parents and grandparents are stupid useful idiots.

Thank you college kidz, teens children and grandchildren for giving me the retirement life I have always dreamed of having; I will appreciate your lifetime of suffering in the slavery your parents and grandparents gave to you.

Posted by: susan | Apr 12, 2010 2:24:25 PM

It would be interesting to project federal revenues from taxes (is that a redundant statement?) onto this graph.

Posted by: RetiredE9 | Apr 12, 2010 12:24:10 PM

The tax increases from the health care legislation are comparatively small; shouldn't we be referring to the Bush tax increase, that President Bush signed into law as part of his temporary tax cut?

Posted by: MattJ | Apr 12, 2010 12:17:07 PM

I considered doing a Roth conversion, but it took too large a leap of faith that the tax laws won't have changed by the time I must make withdrawals.

Posted by: Rick T. | Apr 12, 2010 11:59:35 AM

> Buy munis, book losses, avoid marriage, consider a Roth conversion now and get your Lasik eye surgery next year.

Not necessarily. Obamacare capped the amount that you can put into your flex spending account. The cap, $2500, is just over what Lasik for both eyes costs, so if you're planning to pay for Lasik with flex spending, you can't pay for much else.

Of course, unless you're changing employers or life circumstances, your flex spending amount for 2009 has already been set in stone.

Posted by: Andy Freeman | Apr 12, 2010 11:56:55 AM


No guns, ammo and gold?

Posted by: David in San Diego | Apr 12, 2010 11:41:54 AM

In the old world f 90% or even 70% top tax, how was tax flight avoided? Sound like they want to begin the trek back to that, but would it work in a more mobile world? Not that I want it to happen... I'm already part of the 50% that actually pays. OI!

Posted by: D | Apr 12, 2010 11:22:58 AM