Friday, July 06, 2007

Interesting Advice

Clark Howard is a regular listen of mine. Today in what appeared to be a greatest hits show he had a call from someone selling real estate and the guy was wondering how to transfer his capital gains to avoid paying taxes on it. Clark went through the process, but in the end advised the man to not be so fixated on avoiding capital gains taxes now. In fact, the advice was to take the cash and pay the capital gains tax.

Why? Because capital gains taxes are now at historic lows. So instead of sheltering the cash and then paying much higher capital gains taxes on the money later on to take the cash now and pay the low capital gains tax.

So, what the low rates of taxation do, is to discourage money sheltering and encourage more immediate investment and tax payment. Interesting huh? Still, I have this notion this little story will not take root in the heads I hope it does.

That is low taxes do not necessarily mean low governmental receipts.