Making Taxes Less Taxing: Reexamining Portfolio Design
Perhaps the only thing less appealing than the thought of higher taxes is having to actually pay them. Like parents who try to disguise vegetables at dinnertime, our government has devised increasingly creative ways to hike taxes while leaving ordinary rates (and negative media headlines) unchanged. As a result, individuals in the highest tax bracket can face additional taxes in excess of their marginal rate. Some of these incremental taxes are incurred through earned wages while others are triggered by investment gain realization, creating effective tax rates that can approach or exceed 50%. Similar to soggy broccoli, it seems improbable to hope that these taxes will simply disappear on their own accord.