1 / 33

New Special Report

Burdened by the Past The Government’s Plan for Your Income and Wealth and What You Can do About It Charles Lewis Sizemore, CFA. New Special Report. In a Nutshell…. Tax rates are currently at historic lows. In a Nutshell…. Tax rates are currently at historic lows

jolie-farley
Download Presentation

New Special Report

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Burdened by the PastThe Government’s Plan for Your Income and Wealth and What You Can do About ItCharles Lewis Sizemore, CFA

  2. New Special Report

  3. In a Nutshell… • Tax rates are currently at historic lows

  4. In a Nutshell… • Tax rates are currently at historic lows • America’s debts are large and growing—beyond current stimulus spending, we have the retirement of the Boomers with which to contend

  5. In a Nutshell… • Tax rates are currently at historic lows • America’s debts are large and growing—beyond current stimulus spending, we have the retirement of the Boomers with which to contend • Demographic trends suggest that we will not be able to “grow ourselves out of it” like we did in the 1990s. The logic of the Laffer Curve will not work this time.

  6. Part 1: Tax Rates Past and Present

  7. “Americans' Tax Burden Near Historic Low”- Headline from the Washington Post, April 16, 2009

  8. “The nonpartisan Congressional Budget Office estimates that the average family forked over barely 9 percent of its earnings to the IRS in 2006, the most recent year for which information is available. The effective tax rate hit its all-time low in 2003 and has since crept up only slightly.”

  9. Top Federal Individual Income Tax Rates1913 - 2010

  10. Federal Tax Schedule: 2008 vs. 1980Marginal Rates for Single Taxpayer(1980 Tax Brackets adjusted for inflation) $8,025 S $16,050 M $32,550 S $65,100 M $78,850 S $131,450 M $164,550 S $200,300 M $357,700 S $357,700 M Source: IRS (Inflation Adjustments made by HS Dent using BLS data)

  11. A History of the Estate TaxExemption Amount and Top Tax Rate Estate tax rates have been falling and the exemption amounts have been rising, meaning less estate taxes paid. Will this continue? Source: The Heritage Foundation, from data provided by the Internal Revenue Service

  12. The Laffer Curve

  13. Part 2: Taxes Lower…But at What Cost?

  14. Never-Ending ComplexityNumber of Pages in the CCH Standard Tax Publication Source: “Lessons From a Long Tax Run,” Wall Street Journal, April 15, 2009

  15. Taxes Falling, Debts Rising! Source: US Treasury

  16. US National Debt1791-2008 The growth of the national debt has been exponential Source: US Treasury

  17. Federal Debt as a % of GDP Source: Conde Nast Portfolio

  18. Major Fiscal Exposures($ Trillions) 2008 Source: 2008 Financial Report of the US Government

  19. Unfunded Liabilities Source: The Economist

  20. Part 3: What Now?

  21. Japan Government Debt as a % of GDP Source: OECD

  22. Federal Tax Receipts(in billions of inflation-adjusted dollars) Tax receipts already falling Source: Congressional Budget Office

  23. Taxes and the Rich Source: IRS, Statistics of Income, 2008

  24. Change in Spending at each Age & Stage of Life 46-50 Family, College Kids 22-30 Young Married 31-42 Young Family 50+ Empty Nesters 18-22 Single 60+ Retired

  25. The Immigration Adjusted Birth Index

  26. The Immigration Adjusted Birth Index The Boomer wave is about to hit our retirement programs…like a tsunami

  27. The Spending WaveBirths Lagged for Peak in Family Spending Dow Adjusted for Inflation Immigration-adjusted Births Lagged for Peak Spending

  28. Real Personal Consumption ExpendituresIn 2000 Dollars Source: Bureau of Economic Analysis

  29. States in CrisisState Budget Deficits Source: Wall Street Journal

  30. Est. OPEB Underfunding by State (2007) Source: Credit Suisse 2007

  31. What Form Might Tax Hikes Take? • Possible “Stealth” Tax Hikes • Phase-out of popular deductions such as the home mortgage interest deduction and the child tax credit—particularly for high-value properties and high-income tax payers • Continued tinkering with the Alternative Minimum Tax • Making some forms of retirement income taxable—such as Social Security and possibly even Roth IRA distributions • Making benefits such as health insurance taxable income • Using means testing to eliminate certain tax deductions and exemptions—(i.e. property taxes, sales taxes, child care credit, education, student loan interest, first-time home buyer, charitable donations)

  32. Ed Slott’s Recommendations • 5-Step Action Plan from “The Retirement Savings Time Bomb” • Time it Smartly • Insure It • Stretch It • Roth It • Avoid the Death Tax Trap

  33. Concluding Remarks

More Related