People Scramble in Advance of Expected Tax Hikes

November 5, 2008

When people know that tax increases are imminent, they often change their financial arrangements, especially the timing of large payments, sales or investments. We are already seeing that in the sports world as agents consider the advantage of acting before an Obama tax hike takes effect. Here's the AP story.

Those sports agents are worried about wage tax rates going up, but historically the biggest changes occur in capital gains. In normal times, an impending capital gains tax hike (Obama pledges to raise the rate from 15 to 20 percent) would cause many people to sell appreciated assets before the tax kicks in. It remains to be seen, though, if the tumbling market has taken that option off the table for many investors.

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