Monday, November 19, 2012

Wealthy Can Be Stupid

The NY Times has an article on what people with wealth and/or high incomes are doing in anticipation of changes in tax law for 2013.  I found this to be stupid:
Kristina Collins, a chiropractor in McLean, Va., said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000 for individuals and $250,000 for couples.
Ms. Collins said she felt torn by being near the cutoff line and disappointed that federal tax policy was providing a disincentive to keep expanding a business she founded in 1998.
“If we’re really close and it’s near the end-year, maybe we’ll just close down for a while and go on vacation,” she said.
There's little logic to the position unless she thinks, incorrectly, that the higher bracket applies to all earnings, not just the incremental gains over $250,000.  I hope they have a tax accountant who can advise them better. 

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