The fiscal cliff is getting closer by the day, and it’s not just Washington wonks who are noticing. Even baseball players are on fiscal cliff watch.
Government Executive recently looked at the details of Major League Baseball star B.J. Upton’s newly signed five-year contract with the Atlanta Braves. There’s at least one interesting provision: The outfielder is set to receive a $3 million bonus prior to December 31, 2012. If that bonus came just one day later, on January 1, 2013, Upton would face an additional tax liability of $120,136.
Many of those who are in a position to take advantage of the current tax rates are already doing so. Investors are paying close attention to the current standoff in Washington. Should the United States go off the fiscal cliff, capital gains and dividend taxes will also be increasing, and analysts are already expecting some investors to take advantage of the current tax rates by selling sometime before the new year.
So far, President Obama has given folks like Upton little cause for hope, demanding that upper-income earners pay higher taxes as part of any negotiation on the fiscal cliff. Just yesterday, House Speaker John Boehner (R-OH), along with other top Republican leaders, signed a letter indicating they were ready to cave on the issue of taxes, by accepting decreases in allowable deductions.
For now, not everyone is preparing for the worst. But with the year quickly drawing to a close, and a solution yet to be reached in Washington, more individuals are considering ways to minimize their tax liabilities.