For those who think tax hikes have no impact on behavior

If you don’t believe tax hikes — or even the threat of tax hikes — can affect economic behavior, perhaps you should read this feature from the latest Barron’s.

With a range of taxes set to rise sharply, the rush is on: Private banks, family offices, and wealth managers are tapping the smartest tax minds they can find to come up with new tax-efficient products and portfolios.

The recommendations run the gamut, from stashing money in tax-deferred annuities to loading up on municipal bonds to favoring private equity over hedge funds and cleverly using trusts. The thoughtful reshaping of portfolios is happening with good reason; the tax hikes of 2013 are going to hurt.

Someone with $8 million in earnings and investment income will pay an average $450,000 this year in taxes on top of the $2.7 million paid last year, figures the Tax Policy Center. A married couple with two young kids and a combined income of $2 million can expect to pay $87,500 more in taxes than the $500,000 they paid in 2012.

The government is clawing back revenue from everywhere. The top marginal income-tax rate for couples earning $450,000 and up has increased to the well-publicized rate of 39.6%. Long-term capital gains are not only subject to a higher 20% rate, but also a new 3.8% Medicare tax for a total 23.8%. Short-term gains are taxed at the highest marginal rate plus 3.8% Medicare tax for a total 43.4%. And that’s not all. Alan Kufeld, a tax advisor at Rothstein Kass, points out that a new limit on itemized deductions for top earners adds as much as 1.2% on top of each of those rates.

Unlike the 1990s tax increases under Presidents George H.W. Bush and Bill Clinton—which increased income-tax rates but lowered taxes on investment gains and income—the current assault comes from all sides.

Since all taxes penalize behavior, and convince people to avoid or disguise that behavior, it’s important for a tax system to do as little as possible to penalize the behavior that leads to economic growth. Hence the push at the federal and state level for tax reform.