Imagine I’m a greedy Hedge Fund manager. I’m sitting down with my army of tax attorney’s. “The Bush-era tax rates are expiring, how can I minimize the tax bite so I can buy another 134 foot yacht”, I ask.
First, starting January 1st, I will only pay myself $150K for tax year 2011. That way when I get my fat-ass management fee check of $1 trillion dollars I’ll only have to pay an effective capital gains tax of 25%, better than 39.5% income tax, and by the way I live in Florida so state income tax need not apply. Thanks carry interest. I then systematically invest the remainder (after tax) in stocks and muni bonds. No tax on the interest on the munis and no capital gains tax on the stock because I’m a buy and hold type of guy. See I’m not going to sit by and pay anymore than I have to, especially to the government. Oh and for those of you that think we’ll get it in an estate tax divestment, you know that non-profit charity I set up to feed starving African babies and give single mothers of Bangladesh a micro-finance loan (think Bill & Melinda Gates Foundation)? They’re the trustee to a trust I set up for my girls. I will effectively be worth ~$0.00 (translation: jack-shit) when I pass. So, take that you pompous self-righteous, player-hating, liberal-asshole socialist! You ain’t getting shit.