Scary! The sucking noise of greater taxation is coming January 2013

From San Francisco Business Times article by Martin Calvey, "George Lucas saves hundreds of millions in taxes by selling before year-end," we see what will be a trend to avoid the sucking noise that is government taking taxes for who-knows-what from the private sector after January 1. 2013.

...The bottom line: Taxes matter.

Just take a look at the prospect of federal capital gains rates jumping from 15 percent to 20 percent next year on Lucas' sale. At a sales price of $4.05 billion, the 5 percentage point tax increase represents a higher tax tab of about $200 million — and that's just the capital gains tax. Half the purchase price in the Disney-Lucas deal is in the form of 40 million shares of Disney (NYSE: DIS) stock, which would avoid capital gains.

Then there's the 3.8 percent Medicare surtax on investment income, including capital gains, that kicks in next year. Do you see how the taxes start adding up on a $4 billion deal?

Plus the $5 million gift-tax exemption drops to $1 million, prompting several business owners of far lesser means than Lucas to decide now is the time to sell what took a lifetime to build.

via bizjournals.com:

http://www.bizjournals.com/sanfrancisco/blog/2012/10/disney-lucas-fiscal-clif...

Money which will be going to increased butt-covering by an irresponsible, in-denial federal government, could be used by the private sector, instead, to hire, expand and otherwise boost the true economy next year (yes, by "true economy" I mean the part that is not all about government spending and contract-swapping, kids). But there is this creepy conviction among some of the leaders in Washington, D.C., that government spending is king, not the private sector that feeds that throne of bureaucracy. In lieu of actual responsible budgeting and reduction of bureaucracy -- despite what the president says on the campaign trail -- we will not be going down a road of fiscal sanity.

Government is too big, and the suggestion, overwhelmingly, seems to be that it needs to be bigger, not smaller. The way to save the country is to let government run wild, not to suck it up and make cuts where we must, change entitlement programs where they will otherwise collapse in 20 years, 30 years, or whatever. The best thing to do, it seems we are being led to believe, is to accuse those who talk about real common sense, address the problems with long-view honesty and culpability, that refer to the private sector and hard-working citizens as the heroes of the economy, not government, that they are ogres. That's scary.

Happy Halloween.

Posted via email from Jon Osterholm :: WMBC :: posterous