Why did George Lucas sell to Disney this year? To avoid the hike in capital gains taxes on January 1.
If there is no delay worked out by late December, there will be lots of George Lucas imitators. So says an analyst on CNBC.
So far, there has been no rush to the exists. That could mean that the rich expect a solution to arrive. Or it could mean that rich individuals don’t control the markets. Fund managers do. They use algorithms to invest.
A fund manager can’t beat the system. He cannot fold up shop because of changes in the tax code. He makes his money selling dreams to people who reuse to face reality. They do not believe in the inevitable Great Default of the U.S. government.
There will be sales. Some rich people will want to cash out. But where will they put their money?
Lucas had most of his money in the Star Wars franchise. He diversified. He converted $4 billion into liquid assets. He was smart.
The rest of us aren’t that rich. We aren’t that smart.
When you buy real estate, you can defer capital gains until you die by IRC Section 1031 exchanges.