Millionaires Plot Strategies to Deal With Looming Obama Tax Hikes

Sunday, 05 Aug 2012 09:09 AM

By Dan Weil

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Wealthy people will face sharply higher taxes on investment income if Congress and President Barack Obama don’t agree to extend the George W. Bush-era tax cuts.

Several multi-millionaires discussed with The New York Times their strategies for dealing with the possible tax increases. Those strategies include accelerating capital gains and investing in municipal bonds.

Wealthy people could face a 23.8 percent capital gains tax and a 43.4 percent dividends tax starting next year, compared to 15 percent currently for both rates.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

The Times interviewed several members of Tiger 21, an investment club that requires a minimum net worth of $10 million to join.

They suggest selling long-owned investments with big gains before the end of the year to guarantee the 15 percent capital gains rate.

Leslie Quick III, whose family started discount brokerage Quick & Reilly, says he will scour through investments he hasn’t looked at for years to find the winners.

“Some have done well, so I’m thinking before the end of the year I should sell some of these positions,” he tells The Times.

As for muni bonds, their interest payments are free of federal income tax and would thus be unaffected by the tax increases.

“Where the benefits of munis come long-term is if taxes move [higher], and we have every indication they will in 2013,” Michael Dixon, director of wealth management at financial advisory firm Carl Domino, tells Moneynews.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did



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