A frightful scenario could play out in a couple months unless a lame-duck Congress and the White House are able to resolve their differences on taxes and spending. If they don’t, Bush-era tax cuts will expire Jan. 1, and automatic federal spending cuts will be phased in. Such a combination could doom the fragile economic recovery and send the stock market into a tailspin. What’s more, tax rates on investment income would rise, a particularly scary prospect for investors in the upper tax brackets. Investors may be inclined to sell some investments to take advantage of today’s historically low rates. While acknowledging that could be sensible, John Sweeney of Fidelity Investments urges investors to heed the adage, ‘‘Don’t let the tax tail wag the investment dog.’’
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