Will Taxes Increase?

taxes

I was just listening to a recording of a conference call this morning where a financial planner began his presentation with this premise:

Taxes will be increasing in the future

I haven’t listened to the rest of it because I had to pause it and write this post. I’m sure when I go back this guy will paint a whole picture based on the assumption of taxes increasing in the future.

Really?

Maximum Taxes

Well, first, let’s admit to ourselves that there is a very real, hard maximum taxation point. That’s 100%. A taxpayer cannot pay more in taxes than he has. Beyond that is impossible.

Second, let’s admit that there is effectively a maximum taxation point that is well below 100% of what a taxpayer has. Taxes going beyond this point is improbable. Let me explain…

Whether you may realize this or not, you probably pay 60%, 70% or more of every dollar that has ever been “yours” in taxes. Income taxes, property taxes, sin taxes (on booze), gas taxes, sales taxes, excise taxes, franchise taxes, death taxes, etc. Some of these taxes show up on paper that you can see, and some of these taxes are never declared to you at the point at which you pay them.

Where the Line is Drawn

So with the majority of the money that was ever yours already going to these direct taxes, how much more taxation can you take? Imagine a scenario where we go from systematically losing 70% of our money to losing 90% of our money.

Do you think hundreds of thousands [Read more...]

Solo 401k Provides Unfair Tax Advantage For Self Employed Business Owners

Much Needed Tax Relief For 2009 Is Available, But You Must Open A Solo 401k By Dec 31st, 2009. Nabers says setting up and contributing to your Solo 401k before the end of 2009 will allow married couples to deduct up to $109,000 from their 2009 income taxes. Watch this video to learn more and pick up the phone right now as time is of the essence. The Nabers Group can be reached at 877-903-2220.

Take advantage of this unfair tax break being offered now to the self employed.

Tax Return for UBIT – Does your retirement plan own leveraged real estate or an active business?

Just a quick, last-minute reminder…

  • If your IRA owns mortgage-leveraged real estate, you owe UBIT.
  • If your IRA or 401(k) owns an active business structured as a pass through entity (such as an LLC or partnership), you owe UBIT.
  • If your 401(k) owns mortgage-leveraged real estate AND the mortgage is a “seller carry”, you owe UBIT.

UBIT, or Unrelated Business Income Tax, applies to tax exempt organizations including retirement plans. To pay UBIT, Form 990-T must be filed with the IRS. If this is all news to you, once you are done scolding yourself, you may want to file for an extension using Form 8868.

I.O.U.S.A – Former U.S. Controller warns country's finances are unsustainable

This week I attended a special viewing of a new documentary, I.O.U.S.A. This film substantiates the concerns that our country’s government and citizens are going broke. One of the main authorities featured is David Walker, former U.S. Comptroller General. Other notables include Warren Buffett (CEO of Berkshire Hathaway), Alan Greenspan (former Fed chairman), Paul O’Neill (former U.S. Secretary of Treasury), Robert Rubin (former U.S. Secretary of Treasury), Paul Volcker (former Fed chairman), and Bob Bixby.

Following the viewing of the film itself was a live satellite feed of a town hall discussion including Buffett, Walker, Pete Peterson (chairman of The Blackstone Group & chairman of the Peter G. Peterson Foundation), William Niskanen (chairman of the CATO institute), and Bill Novelli (CEO of AARP).

The Documentary

I expected the film itself to be very eye opening, and that it was. All I can say is you should go see it immediately. Check here to see when it’s showing in your city. If you think that all of the talk of the government heading towards bankruptcy is a bunch of fear mongering, then you owe it to yourself to let this film play devil’s advocate. Opinions are one thing, but I.O.U.S.A. certainly isn’t void of facts.

Live Discussion

The town hall discussion afterward was also rather informative. Truth be told, Warren Buffett’s involvement in this event is what caught my attention enough to attend. When it came down to the actual live (satellite fed) discussion following the film, Buffett was virtually useless. In one of his first comments, he said something about how we was going to be the “pollyanna” of the group. Just as promised, every time Buffett opened his mouth something came out about how our finances will just turn out magnificent because of America’s greatness. These comments were squeezed in between others’ contradictory sentiments explaining that simple unbiased economic forecasting holds the squandering of our greatness in the future if something isn’t done to change our path.

Of course Americans themselves are beating a path to the poor house, but that wasn’t the focus of the film. Much more attention was paid to the finances of the U.S. government. I walked away from this film with the sense that, in all probability, there are three places for us to end up in the next decade or two:

  1. MUCH higher taxes – Who wants to live in a place with taxes higher than socialist countries, yet without free college, medical care, or any other actual benefit?
  2. Governmental & economic collapse – The world has seen many countries rise and fall. No economic system defies the economic/mathematical laws on which it’s built.
  3. Major federal government reduction – Most of the “government” programs we actually see/use/need are actually from local or state government… such as roads, police departments, fire departments, etc. If we all woke up tomorrow with 80% less laws, 80% less government programs, and 80% less government spending, I don’t think it would be the chaotic anarchy that some people might imagine.

The Bottom Line

Most everything that we each do throughout our normal day is based on the assumption that things are being taken care of in a sound manner in Washington, D.C. and in the board room of the Fed. We go about our lives as if we will be the richest and most powerful country in the world forever. This film will shatter these assumptions and divert your attention to an undeniable fact: Some major changes must take place soon in order for the United States to remain a solvent and sovereign country.