"The Amazing January Effect" (what a great inventive
PhD thesis styled as a detective novel) would have us selling our gain
securities and matching them off with our losers. The season has already
started and lasts through the first or second week in December. Theoretically,
the bump in January (about 3% if I recollect correctly) is people buying back
the stock they liked but sold in December after the presumptive wash sale
period expires.
'Back in the day' I was counseled by our tax department at KPMG to have our
mega wealthy clients consider matching gains and losses preemptively before
year end. That was back in the Jimmy Carter years when tax rates were
frequently projected to increase in the next tax year. So, in many cases,
clients would be encouraged to ACCELERATE income including securities gains if
they believed taxes would increase in the next tax year.
Well, what do you think about taxes next year? The 10% surtax. North Carolina
has already enacted a surtax. And what about novel new taxes like a tax on
securities transactions to reduce "harmful speculation." I don't
think since the good ole' Jimmy Carter we've seen the justified fear that taxes
will be raised in the next tax year.
So, a simple multiple choice question. Will taxes be higher or lower next year?
A) Higher,
B) Lower,
C) I don't care, I have 4 kids, get earned income money, Sec 8 money and don't
pay anything.
Jim