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Covering Their Assets: Wealthy Prepare for ‘Fiscal Cliff’ Tax Increases

Nov. 13, 2012 11:45pm Becket Adams

Doubtful of the government’s ability to come up with a plan to avoid the “fiscal cliff,” a combination of automatic spending cuts and tax increases that will go into effect next year unless a budget deal is reached, many high-income earners, the so-called “one percent,” are taking steps to sell their stocks, houses, and (to a lesser extent) businesses before the year’s end.

Why? Because the “fiscal cliff” will bring with it huge tax increases.

“Wealth advisors say that with capital-gains taxes potentially going to 25 percent from 15 percent, and other possible increases in the dividend tax, estate tax and other taxes, many clients are selling now to save millions in taxes,” CNBC’s Robert Frank reports.

As mentioned earlier on TheBlaze, and as noted by Frank, going over the “fiscal cliff” would mean taxes on capital gains returning to a rate of 20 percent (up from its current rate of 15 percent), taxes on dividends going from 15 percent to over 43 percent, and the estate tax going from 35 percent on properties worth more than $5 million to 55 percent on properties worth more than $1 million.

It’s simple: Sell now and save a boatload of cash.

“Under almost any scenario, it makes sense to take the gains this year,” Gregory Curtis, chairman and managing director of Greycourt & Co., said, according to CNBC. “Clients aren’t selling willy nilly. But if they can and they have a huge gain, they’re selling now.”

None of this should come as a surprise. Indeed, the natural response to heavy taxation has always been for the wealthy to move their money. In fact, in certain cases where the tax burden is considered too much, the wealthy have responded by simply moving.

In the U.S., for example, a record number of people have renounced their citizenship in favor of countries with lower tax burdens, TheBlaze reported earlier this year.

Meanwhile, on the other side of the Atlantic, the election of the socialist François Hollande has brought with it a 75 percent income tax rate on anyone earning more than $1 million and an exodus of the country’s wealthy.

In short, excessive taxation tends to result in a loss of wealth and/or the wealthy. But more than just cash being moved around, high tax rates actually work against generating revenues. Think about it: If you tax at a 100 percent rate, what’s left to take?

Ecce! The Laffer Curve:

A 100 percent tax rate will always result in zero revenues

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Front page photos source courtesy the AP.

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Comments (88)

RightUnite
Posted on November 14, 2012 at 5:18am
Of course they’re going to protect their assets! They didn’t get to where they are by being stupid!

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- NeilChapin
  Posted on November 14, 2012 at 5:37am
  Any hope of fiscal sanity in government depends on the House Republicans to stand up to the insanity of the President and Democrats. Read fresh political commentary at: http://smallcraftadvisorychronicles.blogspot.com/
  
  Report this comment
- Obama Been Lauding
  Posted on November 14, 2012 at 6:21am
  The wealthy are not idiots!!
  Under this administration, they probably can renounce their citizenship, and go put their money in another country, then come back in as an Illegal Alien, and get all the benefits, without having to worry about taxes.
  What a great country we live in?
  
  Report this comment
- Silvertruth
  Posted on November 14, 2012 at 11:02am
  This is true, they aren’t stupid, but we are. Romney got 2 million votes less than McCain did. Obama’s base stood solid for him and got him re-elected. The independents actually broke for Romney, so that means that it was the Republican base that failed to show up at the polls. That’s the missing 2 million votes.
  
  If so called ‘conservatives’ can’t even bring themselves to vote for sanity, yeah, I’d sell off and put my assets off shore too. That’s the panic we are seeing in the conservative camp. There is nothing left to do but to let the nation crash and put it back together, at least that’s a popular thought among the disenfranchised. We had a good, honest, smart and fair man in Romney. We let him get trashed, painted as a liar, a bigot, a grim reaper of the poor, and we are now paying the price for it.
  
  Wealthy people, check out now while you still can. Don’t start any new businesses. Let it all crash and then when it does, pull the Constitution out of the rubble and hold it up again. We’ll have another 200 years of a great nation and an example to all what progressivism does even at the largest level.
  
  … at least that’s what some folks think and I’m starting to find myself swayed by the argument.
  
  Report this comment
- paperpushermj
  Posted on November 14, 2012 at 11:32am
  @Silvertruth
  Let it fall.
  
  Report this comment
- Individualism
  Posted on November 14, 2012 at 12:01pm
  there preparing for the crystal night coming.
  
  Report this comment
- Reclaiming Our Nation
  Posted on November 16, 2012 at 12:09am
  Do Something For The Poor. Can a white man be as bold as this man? I doubt it.
  
  http://reclaimingournation.blogspot.com/2012/11/do-something-for-poor-people.html
  
  Report this comment
Detroit paperboy
Posted on November 14, 2012 at 5:08am
Of, by , and for……….the government…

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Apple Bite
Posted on November 14, 2012 at 4:44am
All of this selling and such, and it still won’t amount to anything worth a damn, when you consider the fact, they’ll eventually have to lower their ‘must tax line to the next lower tier to make up for the losses.

That’s always how Socialism works.

When the highest tier is burned dry, they go the next guy below the former tier and say “It’s your turn….”. And the continue to do just that til nobody has anything but the clothes on their backs. That’s where the old saying comes from, ‘The problem with Socialism is, you eventually run out of other people’s money.’

That can’t, and will never be, refuted. But the insane idiots still attempt the jump into the boat of Utopia from the Cliff of Despair.

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- loriann12
  Posted on November 14, 2012 at 6:29am
  I have an aunt who is married to a doctor. She is all FOR Obama. I know she makes more than $250,000, if not, real close to it. I can’t wait, since she complained about Romney and his 47% comment, what she says when she gets her taxes raised. She claims she’s paid the hightst bracket all her life, what is she going to say when her beloved messiah raises the top bracket to 50%?
  
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GulfPeg
Posted on November 14, 2012 at 4:43am
This has happened for decades in the past and still happens all of the time in Latin America. We have become a BANANA COUNTRY. The wealthy take their money out of the country, not only for tax reasons but because they don’t trust the government in power. Until Obama leaves, this country will continue being destroyed (which is what his father wanted – “Dreams From My Father”).

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- chucksue351
  Posted on November 14, 2012 at 6:32am
  leave who said he will leave, michelle will run in 2016 two terms, then their daughters that makes another 16 years then the grandchildren and then
  
  Report this comment
fastfacts
Posted on November 14, 2012 at 4:39am
What do you think, will raising taxes influence the rich and so job creators?

Just today CA Gov Jerry Brown was trying to convince CA that the rich will stick around if he raises taxes, that they are fine with raising taxes. Do you think he is convincing: http://www.thedailycandidate.com/video/2012/nov/brown_touts_rich.html

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Wdawg
Posted on November 14, 2012 at 3:12am
So be it! If they do not want to engage in capitalism, fine by me. What these cronies don’t understand is that some entrepreneurial will fill the demand.

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- Detroit paperboy
  Posted on November 14, 2012 at 4:28am
  @wdawg
  Yeah, some entrepreneur like an Obama FOODSTAMPER will step in and start a business, and follow all the tax rules and regulations and put down the crack pipe and the malt liquor and employ the next generation…………….right….you are either a moron or a government employee.
  
  Report this comment
- Republic_of_Texas
  Posted on November 14, 2012 at 5:49am
  Not necessarily. When there is no reward, there is less incentive. Why would I want to work by backside off to make the same income as the person I bought my coffee from this this morning. History does not show socialistic societies to be produce great innovators. All those who want to work 60 hours a week to make the same as the person who work 40 raise your hand. I have some yard work for you.
  
  Report this comment
- RightUnite
  Posted on November 14, 2012 at 6:51am
  Aaahhhh… Sorry to burst your bubble, but there are no entrepreneurs in the 47%. You actually have to be intelligent to start up a business, much less be well off. That will never happen with the low life’s who voted for Obaomer….
  
  Report this comment
- Wdawg
  Posted on November 14, 2012 at 11:54am
  Sounds like you three are part of the 47% losers! Demand will not be crushed
  
  Report this comment
- cosmic dogma
  Posted on November 14, 2012 at 11:57pm
  Sure they will. Who doesn’t want to work 60 hours a week for pocket change?
  
  Report this comment
- Supermassive
  Posted on November 17, 2012 at 10:12am
  Absolutely ignorant…obviously you didn’t take anything remotely resembling basic econ. Sure supply will meet demand in a free market system because there is wealth to be gained by providing said supply. Reducing the wealth to be gained by outside means, such as taxes and penalties, reduces the likelihood of that item being produced to meet demand. What happens then is that item will increase in value due to the shortage of supply, so now something you wanted before is more expensive, less available, and you are poorer for it because there are less jobs creating said item.
  
  Don’t be an idiot and post on this board, think beyond what the media tells you, do a little research and if you still come to the same conclusions then you are certifiably incapable of rational thought.
  
  Report this comment
charleyrocks
Posted on November 14, 2012 at 3:07am
All prices will go up on every bit of merchandise to make up for the loss that’s what is going to happen. Hey can ya get a numbers guy in the white house please someone with economic experience and QUICK!

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grayling646
Posted on November 14, 2012 at 2:44am
Thanks Blue states. You just screwed the rest of us too.

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Chuck Stein
Posted on November 14, 2012 at 2:17am
If I were super wealthy, I would be very seriously considering giving up my citizenship.
I couldn’t do it for tax avoidance — and still avoid payment of the taxes. But it wouldn’t be to avoid taxes.
In ancient Greece, every year one citizen of each city state was “ostracized” by majority vote. Haven’t the wealthy been shown an effective vote of ostracism? They were constantly demonized in the campaign. They are called greedy and unpatriotic by the majority party. If they were to leave the country, a few more might call them unpatriotic — but so what? That epithet has been worn so thin that it is meaningless as it is used.

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Elena2010
Posted on November 14, 2012 at 2:06am
At dinner tonight, a friend shared w/me that they simply liquidated all their stocks. They put the cash in the bank, waiting to see what this fool in DC was going to do next.

Beck says buy land and food. Add to that FMJ and other metals.

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- Arizona Don
  Posted on November 14, 2012 at 5:27am
  Guns, Gold and Silver. Not necessarily in that order.
  
  Report this comment
- RightUnite
  Posted on November 14, 2012 at 6:54am
  Yeah, I don’t put a whole lot of stock in banks nowadays either…. Hopefully they won’t have all their cash confiscated.
  
  Report this comment
- marybethelizabeth
  Posted on November 14, 2012 at 7:54am
  It would be better to wait to buy land until the market bottoms out.
  
  If you think you will need ready cash then land is the last thing you wold want to buy because it is not liquid.
  
  Increasing the demand for land increases it’s price. Increasing demand inflates the value. A new bubble is started.
  Fortunes are made waiting for the bubble to burst and buying assets at bargain prices.
  
  Be careful of accepting economic advice from charlatans, especially if their initials are GB.
  
  Report this comment
- rosegrower
  Posted on November 14, 2012 at 12:37pm
  @MARYBETHELIZABETH
  Farmland is appreciating in value – one major auction held in Iowa netted the landowner 13,000 per acre (ordinarily farmland in the Midwest goes for $3,000 to $5,000 per acre.) The reason that land is so valuable is that it is productive – a person can grow what they need to live on, or attract enough wildlife to hunt to fill a pantry for a year. Food inflation on a massive scale is coming, thanks to the Senate’s latest Farm Bill. This was tabled before the election but will be ramrodded through. One of its provisions is that farmers who produce more than the government’s quota for a particular commodity will be fined for doing so – another part of the Obama agenda that punishes success. What this will do, of course, is make every farmer limit their production to the the threshold figure. It doesn’t take a rocket scientist to calculate the consequences of this move, but obviously there are a few Ivy League graduates who can’t – or who don’t give a rip.
  
  Report this comment
- cosmic dogma
  Posted on November 15, 2012 at 12:00am
  Argentina converted all bank deposits into gov bonds, overnight. Don’t forget who “owns” the banks.
  
  Report this comment
socialism.rocks
Posted on November 14, 2012 at 2:05am
only reason big government ever happens is when big capitalism fails…

blaming government because of capitalists just shows capitalism is inferrior

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- Chuck Stein
  Posted on November 14, 2012 at 2:23am
  The problem is that the “capitalism” that has failed is not really capitalism. The whole housing bubble and collapse, for example, has been the product of government manipulation of the housing market through guarantees of what should be private transactions. Where investors money can be lost, there you will find the most effective regulation and there you will find what can properly be called “capitalism”. Government guarantees and “too big to fail” are antithetical to capitalism.
  
  Report this comment
- TheBurningTruth
  Posted on November 14, 2012 at 3:53am
  Man, you’ve got your head up your a$$ on that one. We haven’t had capitalism here for over a century. For the last 50 years there has been an ever increasing govt takeover of business through all kinds of regulations.
  
  As for “Socialist Rocks” yeah socialism is great. Stalin murdered almost 40 million of his own people. Hitler (remember, National SOCIALIST Party) killed tens of millions Germans as well as 6 million Jews throughout Europe. And the real winner, Mao murdered an estimated 60+ million between his purges.
  
  Yeah, Socialism really rocks!
  
  Report this comment
kiwi1
Posted on November 14, 2012 at 1:20am
Obama is all about destroying the Middle Class. All of his programs are designed to eliminate the Middle Class. He has not been hurting the rich, they can afford the increases. He’s been handing out freebies to the lower income people to get their vote, but they will find out those freebies will get smaller until they are only crumbs barely enough to sustain life. There will only be (2) classes left. The very rich and the very poor. That has always been the plan. The Politicians, Elites and chosen celebrities and then the slaves in the poverty class to work for them. Congratulations Obama Voters. Due to your Greed and Envy we will all be Slaves.

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- right-wing-waco
  Posted on November 14, 2012 at 1:52am
  You are so correct and this 2 class system that he and his minions are forcing on us is called COMMUNISM. They took over the schools and the media and now they are working on the churches. I am afraid that America is over. To repair it we need to delete all government departments that are not in the Constitution, and return to Art. 1, Sec. 8 and follow the Constitution carefully. Get the commies out of the colleges and replace the Congress with people that want to save the Republic and dump the welfare state. I don’t think we can do that.
  
  Report this comment
- pamela kay
  Posted on November 14, 2012 at 4:20am
  So all of the simple minded morons that hate the rich will finally understand that the rich have the money to cover their assets and won’t be the grand solution to our economy after all. How shocking. Do they really think that all of the celebrities would be willing to give more of their dollars for the good of our country? Obama and the progressives have to destroy Christians, the middle class, and our military to complete their agenda. Many of the latinos, the black community , those on welfare, the gay communities, and the union workers will be greatly disappointed. They have been used and will not be better off after all. Agenda 21 will not care what race, religion, sexual preference or what organization you belong to when they enforce their regulations down our throats.The American people have been lied to, those of us that have taken the time to educate ourselves will not be shocked by it but the rest of the country will not know what hit them.I have to believe and have the faith that those of us who have followed this from the beginning will be able to convince more people what is at stake before it is to late. Here in Ohio it is beginning to reveal its ugly face to some of those who voted for Obama. Cuts in food stamps have been made. The reaction to those who receive them is in the news and they are outraged. It makes me angry because the people who truly deserve help are punished by those who abuse the system. Things will change at a more rapid pace.
  
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- bekhiet
  Posted on November 14, 2012 at 7:45am
  Each time a dig a little deeper into the Agenda 21 issue, it get’s worse and worse. At this point, I am wondering if not knowing was better. It is shocking to see those who are involved. Is the Hunger Games a forshadow?
  
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WhatTheHuh
Posted on November 14, 2012 at 1:10am
Ya think a lot of those wealthy people are the very same who campaigned and voted for Obama? You know, all those elite Hollywood liberals, for example, who kept telling us they didn’t mind paying a little more in taxes? These are the people who want to sleep better at night because they advocated a system they want nothing part of.

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- Git-R-Done
  Posted on November 14, 2012 at 2:10am
  Then how come George Lucas isn’t willing to pay higher capital gains tax rates?
  
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Ghandi was a Republican
Posted on November 14, 2012 at 12:49am
And the poor will get hammered like never before. The politicians won’t even get a morsel to them. Why would they? Bread lines and the occasional potato. That is always where it ends up,

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christos
Posted on November 14, 2012 at 12:46am
There goes any New Jobs,Job expansion,Investing,Bonuses,Research,Product development,Lack of incentive,Commissions,More layoffs,Uncertainty,More stress,Lack of creativity,instability,who’s shoulders does it land on — who absorbs the burden of More taxes the Middle class & the Poor,,,,

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Ghandi was a Republican
Posted on November 14, 2012 at 12:46am
Everyone will get a huge tax decrease under obama’s plan. After they he takes all your money., there will no longer be anything to tax. That, and the fact that the taxpaying medical field is being destroyed (1/5 of revenue)b should speed things right along.

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Git-R-Done
Posted on November 14, 2012 at 12:30am
I don’t blame them for doing so.

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rsanchez1
Posted on November 14, 2012 at 12:19am
Bueller? Bueller?

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Lordcsmith
Posted on November 14, 2012 at 12:18am
George Lucas stated that this was exactly the reason why he sold IDL and the Star Wars franchise to Disney before the year’s end. Yet they still voted for Obama. I don’t get it.

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- rawmilker
  Posted on November 14, 2012 at 12:32am
  What are the HOllywierdos going to do?
  
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- DadRocked
  Posted on November 14, 2012 at 12:42am
  ♬ Money, Money, Money……MONEY! ♫
  
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asybot12
Posted on November 14, 2012 at 12:05am
Smart people do not talk about what they are doing they do it!

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- DadRocked
  Posted on November 14, 2012 at 12:46am
  Those that TALK, don’t know… Those that KNOW don’t talk…
  
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gatitabonita
Posted on November 14, 2012 at 12:02am
I’m prepared too just a few things here and there I want to add or take off . I urged everyone to take care of their situation before Jan of 2013. Yes the middle class will get hammered at the end of the day this is about saving your family and self preservation don’t procrastinate and save what you got before the end of the year

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- RaydocX
  Posted on November 14, 2012 at 12:53am
  You are spot on… The middle class is already paying by higher gas prices and food cost.
  Jobs are being lost or hours shortened by the pending Obamacare.
  Already most of tax revenue comes from the top earners, and when taxes become too high they prevent business expansion and kill motivation.
  Taxing businesses kills foreign trade (Europe makes them pay VAT taxes too) and tax increases will be balanced either by worker firings, hour/ benefit reduction or increased cost to the consumer.
  
  When his tax the rich policy begins to fail, he will be forced to extend his faux ‘mandate’ to include much of the middle class…
  
  I suspect Barry was high or skipped his econ101 course.
  
  Report this comment
StrongWesternbabeluvinherWesternMAN
Posted on November 14, 2012 at 12:02am
have a dream & idea, live many years working over 80+ hrs a week, family lives on nothing, sleepless nights, hire a few & make sure they are paid while no take home pay 4 the owner. Then the dream begins to take off, share with employees and family and charity, able 2 finally improve home and automobile and take a vacation for some rest……get tormented, robbed, & slandered by the drones, & now threatened with extinction by the mob……..love of country & Gods means saying no to Despotism!

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gatitabonita
Posted on November 13, 2012 at 11:58pm
I’m prepared too , just some finishing touches and yes the middle class will get hammered but this is about self preservation so I urge everyone to take the necessary steps to save what you got before Jan 2013. Be proactive and get on it today

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marine249
Posted on November 13, 2012 at 11:57pm
IF YOU DON’T GET HOSED
LET me KNOW

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honor007
Posted on November 13, 2012 at 11:49pm
oh, elections do have consequences. Glad I am well prepared.
If you are not, good time to start!!!!

The middle class is about to get smashed!

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