How incentives matter, even in politics (Part I)
A recent article in the New York Times had one of what will surely be many stories on how investors and business owners everywhere are responding to potential changes in the tax laws. Money quote:
Kristina Collins, a chiropractor in McLean, Va, said she and her husband planned to closely monitor the business income from their joint practice to avoid crossing the income threshold for higher taxes outlined by President Obama on earnings above $200,000 for individuals and $250,000 for couples.
Ms. Collins said she felt torn by being near the cutoff line and disappointed that federal tax policy was providing a disincentive to keep expanding a business she founded in 1998.
“If we’re really close and it’s near the end-year, maybe we’ll just close down for a while and go on vacation,” she said.
Note to Congress (and the White House): incentives matter.