Your Unbiased Advisor: New ways wealthy avoid taxes and we pay theirs

New ways the wealthy avoid taxes and we have to pay their share

The corporate rate was lowered to 21% (effective rate is 12%), so “today we can think about using corporations even though it means two layers of taxes, while historically we might have said that it doesn’t make any sense to have two layers of taxes,” one specialist says. This means the rich avoid 37%, 35% and 32% tax rates with income of $157,500 or more just by taking income as a business. They deduct their expenses as business deductions and pay under HALF the official rate. Even if they have the corporate and individual tax, they design income to the lowest possible level and end up paying less than we do. The wealthy have figured out how to avoid taxes. For instance, Warren Buffett, with $90 billions, pays only 17% total tax: http://www.youtube.com/watch?v=Cu5B-2LoC4s; Mitt Romney only 14%; John Kerry only 13 % and Apple just 9.8%. Buffett found that his staff pays 32.9%—DOUBLE their rate!

They can use ‘carried interest’ as a Trader Business of their family office to deduct investment expenses, which were ended by the tax law. And remember, they can deduct their contributions to a deferred comp plan and let the company pay for their rides and entertainment and part of their dwelling. They can use their tax-deductible foundation to pursue hobbies or pay off debts. They can also bunch up their deductions to take full advantage of the new law. Inequality in net worth rises by 2020 election.

Avoid paying wealthy people’s taxes: https://www.amazon.com/Trump-Tax-Shelter-Avoid-taxes/dp/1985448300

Will you have enough?

According to 2016 govt data, “older households” (over 65) spend an average of $45,756 a year, or roughly $3,800 a month. That’s about $1,000 less than the monthly average spent by the average

U.S.

household. Of course your spending in retirement will vary a lot so it is helpful to compare ‘average’ to your estimates. For instance, housing expenses average $1322 a month. But if you live in a high property tax area, your tax or rent will be more. Rents are above $2,000 in N. NJ. Compare the average in transport, food, personal, insurance, charity, vacations, hobbies, etc. Now, try estimating your SS benefits, pensions, IRAs, 401ks, other income. Average SS benefit we know is $1,342 a month. If you both have similar salary and work records, you can double that--$2,684. That leaves about $1,116 from all your other sources. Don’t use the popular 3% or 4% withdrawal rate—that worked when you could earn 6% at the bank. Markets change every year. You can estimate what you need and then you will know whether you should keep working.

By age 70, you must take your RMD from any tax-deferred plans. You can also increase your SS benefit each year by working past age 66 or 70 because SS recalculates your benefit each year with the HIGHEST 35 years of earnings, including those you earn after you begin receiving benefits. Perhaps you will have a surplus of income over expenses. Check 17 ways to use your RMD: https://www.amazon.com/What-your-RMD-much-spend/dp/1718946716

Why our children don’t know how to invest for the future

Only 5 states require schools to teach financial literacy. They don’t know compounding builds wealth or how to make wealth earnings tax-FREE. This leaves our future adults with no way to secure their future unless they inherit money. Employers are dumping pension plans en masse. In 1983 there were 175,143 plans, but in 2008 there were only 46,926 plans. So most employees have no idea how to replace the plans they have lost or never had. 401k was supposed to be the supplemental plan not the center piece of retirement. Now you know why most people are not ready for retirement and when SS is cut in 2034, this country will have the poor living on the street in the thousands. Warren Buffett is not a salesman for the financial industry so his simple strategy is the best way for our high schoolers to learn compounding and investing. His strategy requires time not big bucks—10% of salary is all the young people need to grow their money to a Wealth Reserve for life. In fact, if they or family contributed $2,000 for 8 years by age 27, they might have over $1 million by retirement just from the Miracle of Compounding.

Buffett’s Strategy works: https://www.amazon.com/MasterClass-Buffetts-SIMPLE-Strategy/dp/1983485268

GOP will end health care for Americans with pre-existing condition

GOP faced town hall outrage as it tried to end ObamaCare. Many people learned to love some benefits of ObamaCare. That included the expansion of Medicaid, allowing young people to stay on their parents’ insurance up to age 26, and forbidding insurance companies from denying anyone coverage or charging them more because of pre-existing conditions, which just about all of us either already have or will one day have.

The popularity of those provisions made repeal politically dangerous, so Republicans decided to leave the popular parts in place and try to repeal only the unpopular parts. Even that, however, proved impossible to do, and in the end they settled for a small morsel: Trump’s tax cut law repealed of the individual mandate by reducing the fine for not carrying insurance to zero.

Now TX leads a new lawsuit from a group of conservative states seeking to strike down the entire ACA. Trump has taken a position in that lawsuit that is just dumb. Trump will not defend the law that requires insurers to cover all his supporters with pre-existing conditions. They will lose coverage because of outrageous premiums on their conditions.

Trump and the GOP will have a hard time in 2018 since most Americans want coverage.

Buy only what you need: https://www.amazon.com/Health-Insurance-ONLY-right-policy/dp/1480125083

Did you forget to sign up for Medicare on time?

Did you mistakenly stay on your old private insurance plan (ObamaCare) past age 65? You should have switched to Medicare. Now you are stuck with costly lifetime late-enrollment penalties on your Medicare premiums. Until now! You can fix this problem is Sept. 30. If you have health insurance at work, there is no need to worry. You sign up when you retire. This late penalty forgiveness ends soon. Avoid the annual 10% penalty as higher premiums for Part B—doctors. Visit your local SS office to see if you qualify. Read instructions: bit.ly/2Jyzx8s. Bring all your health care paperwork, including evidence that you have been enrolled in a marketplace plan.

Get all the coverage you already paid for: https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf

Have you felt the wage increase?

Yes, real (after inflation) wages are going up after years of decline. The larger fact is that real hourly wages have been generally rising since hitting a low point in 1994-95. As of April, they were 19 percent higher than that low point. However, they are 1.5% below the highest point reached in 1972. Average workers’ wages have remained below the high of $9.40 adjusted for inflation. To make it up, we work more low pay jobs. 60% of American children are on Medicare or CHIP because their parents can’t afford health care or don’t receive it at work. Paychecks are rising even faster than hourly wage rates, because part-time workers are finding more work and full-time workers are getting more overtime pay. Inflation-adjusted weekly earnings for production and nonsupervisory employees have risen 1.4 percent under Trump, after rising 3.7 percent under Obama.

https://www.amazon.com/Americas-Socialism-for-Rich-little-people-pay/dp/1535218584

SCAMS: Beware the ‘guaranteed interest payments’ scheme

Steven Pagartanis, NY stole $8 million promising guaranteed monthly interest payments to his customers. He said they were invested in Genesis Land Development of

Canada

. There is such a firm but when I emailed them, they say Pagartanis’ investments are unknown to them. Since 2013 his firm Lombard Securities never checked his promises and no customer ever confronted him. Apparently, Pagartanis kept up the “above market” interest payments until this May. As in many Ponzi schemes, the payments and statements eventually run out ala Madoff. Usually the original investments are spent or hidden by the perp. Lombard is required to supervise its brokers but Lombard apparently has failed with other brokers and their non-traditional securities. Lesson: don’t assume your broker if offering you a legal deal if 1) the deal is great—above the market returns; 2) the firm or broker has a record on BrokerCheck; or 3) you don’t verify your money went to place your broker claims. In this case, you might have suspected something from broker record of not disclosing annuity terms to his client in 2013 and leaving 10 firms and joining 10 firms since 1996. Unfortunately, the industry lets bad eggs move to new firms and bad firms hire them. It is all about making money--caveat emptor and white collar crime is NOT a priority for Sessions and Trump.

Get an unbiased opinion before buying: https://www.amazon.com/Pimps-Wall-Street-money-middlemen/dp/151525254X

Is a safe-deposit box right for you?

Are you really paying $150 a month to the bank—$1,800 a year for a safe place to keep your goods? Over time that is costing you $1.3 million if invested in simple index account like Warren Buffett recommends. That might come in handy if you face unexpected medical or long-term care expenses 30-40 years from now. Consider that you already have insurance to cover jewels and other replaceables. Most of your important papers can be duplicated. Deeds, wills, list of credit cards passwords, passports and other information items are not going to be available to your heirs when you pass unless the box is held jointly. Your executor needs a court order and you won’t know since the will is off limits to you. For theft and fire safety, a home safe is more useful. You have the info and items at hand when you need them. A good safe costs $150-$250. It can be secured and hidden at home. It is fireproof and waterproof. Write the code down in a email to yourself. If you have fire or water damage, you can retrieve it from offsite computer or phone. You will need the $1.3 million later so use Buffett’s advice.

Make Warren Buffett your advisor: https://www.amazon.com/Warren-Buffett-Your-Investment-Advisor/dp/1518690963

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~~America~~

, “The Don” Great Again

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