Twelve days ago I wrote about the futility of trying to tax the rich, indicating that they will go to relatively extreme lengths to avoid being taxed. More recently I encountered an example of this tax avoidance behavior you might find interesting.
A person we knew in CA, who has a lot of self-made wealth, is arranging to move out-of-state when he retires in a couple of years. He has bought a winter home and a summer home in two states which levy no state income tax.
Both of these homes are classed as “income” property, to meet the minimum requirement for which each has to be rented for at least 15 days a year. This he does through a vacation rental agency. Apparently his places in CA are treated the same.
By doing this he avoids a variety of income and capital gains taxes. And he can write off as “business expenses” the cost of maintaining these valuable “business” properties. These are costs you can’t write-off on your residence.
So when you hear President Doofus talk about taxing the rich, shrug it off. They (and their CPAs) are way ahead of him.
