Rich prepare for Obama's tax plan
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Kai Ryssdal: Barack Obama has said he wants to raise taxes on the wealthiest Americans. That means the federal income tax rate for people in the top bracket could jump from 35 percent to just shy of 40 (percent). Figure two-and-a-half months to inauguration day, Stephen was just saying, maybe, I don't know, a month or two more for a tax package to get through Congress, and time's running out for businesses and wealthy individuals to make appointments with their accountants.
Marketplace's Jeff Tyler reports, now, on those who want to take advantage of the old system before the new administration takes over.
Jeff Tyler: Multi-millionaire athletes are among those who could face higher taxes under an Obama administration. So some sports agents are trying to protect the next round of super-stars. They're asking for their client's signing bonuses to be paid during this calendar year. That way, they'd have to pay less to Uncle Sam next year.
Other high earners are concerned that Obama might raise the capital gains tax. Tax lawyer Richard Walton with Buchalter Nemer says, even in a down market, this could be the right time to sell certain capital assets.
Richard Walton: Such as buildings, such as stocks, such as real estate, that have appreciated significantly and go ahead and realize the capital gains on those investments while the rate continues to be low.
Walton also recommends thinking about estate planning to minimize the death tax.
Walton: In a depressed market, where investments are not worth as much as perhaps as they will be a year or two years from now. Now is the time to begin moving that money in a way that generates a benefit down the road for estate planning.
Anticipating higher tax rates ahead, Los Angeles-based CPA Steve Willing suggests investors take a second look at their portfolios.
Steve Willing: Consider shifting slightly more into the municipal bond category, so they have tax-free income, because if the tax rates go up, tax-free income will become more valuable.
But don't over-react. Just because you might save a few bucks by taking the tax hit this year, experts say you could be better off paying slightly more next year, and having that cash available.
I'm Jeff Tyler for Marketplace.