Trump Tax Plan

Donald Trump: Right now, American companies anywhere in the world, my economic team is developing historic tax reform that will reduce the tax rate on our companies, so they can compete and thrive anywhere and with anyone at the same time, we will provide massive tax relief for the middle class. We must create a Level playing field for American companies and our workers.

David Scranton: Yes. It’s that time of year again that time of year for the flu and that time of year for tax season and as if tax season weren’t stressful enough, this year, we have a new president proposing a radically new tax plan and as of now most Americans still have more questions about it than answers. It’s important to talk about those questions because the answers could have major impacts on every taxpayer in the country. That means individuals at every income level and businesses both big and small will those impact start this year or next? Will they create new opportunities to improve your retirement portfolio? and what will they mean for working families as well as big corporations, in short will Donald Trump’s tax plan achieve its goal of helping revive the US economy and making America great again, or do the numbers simply not add up. It’s time to tune out the hype and focus on the facts, facts that matter to you, the Income generation. Let’s get started.

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David Scranton: Hi everyone and welcome to the income generation, I’m David Scranton your flu ridden host, on Today’s Show we’re talking taxes, specifically we’re examining the hotly debated and still largely mysterious tax plan of the Trump Administration. We’ll look at what we know about the plan so far and which important details are still missing, we’ll discuss how it might work, how could fail and what it might mean for everyday investors saving for retirement. I simply cannot think of a better guest for the show than Steve Forbes. He’s been an outspoken proponent of tax reform for many many years. He’s also run for president himself with taxation as his major campaign issue. Steve will be joining us shortly, we’ll also get insights from some of my fellow financial advisors who know just how important tax laws and loopholes can be when it comes to helping clients build a solid retirement plan, but let’s start with a basic overview of what we know so far about the Trump tax plan if Trump’s tax plan as outlined now becomes law, the rules for individual taxpayers will change dramatically,  the biggest change would be a reduction in the top tax bracket from 39.6%to 33.3% a 6.6% cut. That’s just one aspect of Trump’s proposal to solidate existing brackets, replacing the current seven tax rates there would now be only three, 12% 25% and the top 33 %, the new plan would also eliminate that pesky and sneaky net investment income tax of 3.8% that started during the Obama Administration along with the rest of Obamacare the new top tax rate, yes would be a true 33% with the top rate on capital gains and dividends being a true 20%. We also know that Trump’s plan would eliminate the estate tax potentially giving you the chance to pass a valuable inheritance on to your heirs and loved ones completely tax-free, the key word there is potentially, as is always the case with tax proposals and finances in general the devil is indeed in the details, and we don’t yet have all of those details one of the most commonly discussed parts of the Trump plan is the impact on corporations and small businesses. During Trump’s campaign he outlined he’s in crippling tax and regulatory burdens that may have driven many US companies overseas, currently corporations pay a tax at a rate of 35% which Trump has claimed is the highest tax rate in the industrialized world for corporations. His tax plan would slash that rate all the way down to 15% with Congress proposing an alternative 20%, overall most businesses would make out well under the current Trump proposal better position to grow they would in turn hopefully create new good-paying jobs. Well Trump also plans to rework individual tax rates the primary benefit to America seems to be reducing corporate rates so that there could be more jobs in total for hard working Americans, despite potential positive outcomes, not everyone is sold on the Trump tax plan many who support the plan admit has a fair number of challenges. The main one is that these tax cuts far outweigh his proposed spending cuts, the question becomes will the 4% economic growth he’s aiming for be enough to make up for the shortfall or is our national debt about to spiral even further out of control under the Trump plan. I’ll talk more about that later in the show but right now we’re going to check in with perhaps the most knowledgeable experts in the country on the topic of tax reform specifically, Mr. Steve Forbes. Steve Forbes is of course editor and chief of Forbes Magazine and a renowned authority on business, the economy and also politics. Steve was twice a candidate for the Republican Presidential nomination and ran largely on campaigns to establish a flat income tax, his most recent book is “Reviving America how repealing Obamacare replacing the tax code and reforming the FED will restore hope and prosperity”. Welcome back Steve.

Steve Forbes: Good to be here, David. Thank you.

David Scranton: You’re very welcome. You’ve recently published an open letter to Donald Trump in Forbes entitled “Don’t let Congressional Republicans wreck your tax plan” identifying what you called a possible poison pill provision that could severely damage the plan. Can you talk about that?

Steve Forbes:  Yes, it’s a thing called The Border adjustment tax, which is a 20% sales tax on stuff we bring into this country. What that means is for example a gallon of gasoline with that 20% sales tax would go up 30 cents a gallon for a lot of motorists, a car that was reported in the paper the other day in the United States would go up 2000, or a truck would go up 2500 dollars per vehicle, you go to a Walmart you go to Kmart you go to any store like Target, the prices of the stuff you buy they’re going to go up. So, it hits working families, hits middle class Americans the very people who put Donald Trump in power, moreover, It gives a huge break to exporters, Boeing for example announced a few months ago it plans to sell sixteen billion dollars of aircraft to the mullahs in Iran, that sixteen billion dollars under this Republican border adjustment tax would be tax-free. So big companies like GE and Boeing will get a huge break, working Americans will get a real hit to their already stretched pocketbooks and the Republicans say, well, they need to do it to raise money to cut other taxes, well David, the whole purpose of cutting taxes is to reduce taxes not introduce new taxes.

David Scranton: So, it’s good that it helps Corporate America, but the problem is of course that it hurts the little guy and I know you’re certainly always been a proponent of the average American as have I but do you think that Congress, Congress is with him on this he seems to be a fan of the Border adjustment tax. So do you think this when you say poison pill do you think this is something that’s going to, that’s going to get stopped up somehow? or do you think with Republicans and Donald Trump both agreeing do you think it’s likely to get pushed through but just could be a negative for the average American?

Steve Forbes: Yeah. I think the president when he makes a final decision on taxes, I don’t think he’ll go along with this, B-A-T border adjustment tax call it the bat a rabid bat. I think he’ll come out against it as he recognizes that it hurts the very people who put them into office and also hurts the economy, so establishment Republicans in the house led by Paul Ryan are going to push this thing. I think a lot of Senate Republicans are beginning to have real doubts about it. So, I hope it gets beaten in Congress before they send a bill with this poison pill to the White House.

David Scranton: Well, how does Trump’s plan as we know it today aligned with some of your plans that you’ve had in the past for reforming tax code?

Steve Forbes: Well, it does some good things, it sharply reduces the corporate tax from 35% which is one of the worst in the world to 15% making it one of the best that’s great, instant expensing of your Investments is fantastic. So that encourages investment, also gets rid of the death tax, we’re all for that. You should be able to leave the World unmolested by the IRS. So, there’s some good features in there but this poison pill this border adjustment tax, they’ve got to take that out because that’s going to wreck everything and just do a simple straight across the board tax cut and I would make it retroactive to January 1st of this year so that Americans get a real kick in there, good kick in their pocketbooks, the economy gets a boost right away and we can get this economy and the gear that it should be fourth gear instead of second gear.

David Scranton: Yeah in the 15 % corporate tax, though, I think it’s important for our viewers to understand, that the whole goal is to really bring Corporate America back to the United States so we can create more jobs hire more people and everyone’s better off but you think he’s going to get his way with the 15%? or do you think Congress is going to negotiate him back to a higher number of such as 20%?.





Steve Forbes: Well, even 20 would be far better than the 35 we have today, but Trump being an experienced negotiator I think will lead with the 15 and see how much he can get the number close to that 15% the lower they make at the better, and one of the things they have to do is avoid these so called tax scorings that is when the Congressional budget office says it’s going to increase the deficit by x amount of dollars or reduce revenues by y amount of dollars that’s projecting 10 years in the future, they have no idea what’s going to happen, you have the economy moving, asset values go up, job creation goes up, It’s good for everyone but perhaps the Washington politician.

David Scranton: You know Steve, that’s really everyone’s $50,000 question is, can these, are these cuts to out of whack with the proposed spending cuts? that we’re going to end up adding to the national debt, can we really grow fast enough to pay for this or the national debt just going to mushroom out of control? What’s your take on that?

Steve Forbes: Well, we saw in the 1980s and 90s, even when spending wasn’t restrained very much that if you have a vibrant economy eventually you get budget surpluses and when you get budget surpluses, you can start to knock down that national debt and the thing Republicans have to realize, Congress has to realize is when you make an investment, it doesn’t pay off overnight you announce you’re going to build a skyscraper in New York City, it takes several years before that thing actually becomes a reality, building a new Factory same thing, so you have to allow for time for these things to kick in and when they do as we’ve seen in the past it is a mighty mighty good stream of revenue and prosperity.

David Scranton: It sounds like what you’re saying is of all of the previous Democrats that have been the Oval Office, President Clinton did a better job than most from the sounds of it referencing the late 1990s growth or maybe just got lucky and inherited, I don’t know, but listen we need to take commercial break on a personal note.

Steve Forbes: What happened was he was lucky in the sense that his party lost control of Congress–

David Scranton: That’s right.

Steve Forbes: and when the Republicans got in charge, we got welfare reform we got to cut in the capital gains tax and other good things–

David Scranton: Except except he was

Steve Forbes: So, republicans have to remember that very much.

David Scranton: except Steve he wasn’t the one who was lucky we were the ones that were lucky because of that. So listen, we need to take a commercial break and on a personal note I’ve sent you something in the mail, keep an eye out for it, but for now, please stick around we have more to talk about after the commercial break, We’ll be right back. You’re watching the income generation.

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David Scranton: Welcome back to the income generation. Now, let’s bring back our guest Steve Forbes, listen let’s continue our conversation. You know, what would be the most important keys in your opinion to president Trump having success with his tax plan?

Steve Forbes: Well, the key thing is to get a good straight bold tax cut plan through, don’t put in this crazy 20% national sales border tax in, make it clean, make it big and I would push it through now, even though the Republicans are deep into health care that’s going to take a lot of work , a lot of controversy, do a big tax cut make it right, make it retroactive and you’d start to see this economy blossom. There’s a lot of optimism out there, people ready to move and we just got to start to, he’s got to start to have Congress deliver on the promises that he made the American people are expecting it.

David Scranton: Speaking of making it clean, you know, you’ve always been a proponent in the past of a flat tax and if we’re cleaning things up makes it much flatter much fairer, his plan has three different tax brackets, which is the closest we’ve come since the Reagan administration where we really had, you know, kind of sort of 2 and 1/2 tax brackets. Do you think the three-tax bracket plan is a good plan is it close enough to a flat tax that it actually makes sense?

Steve Forbes: It’s a good step in the right direction and  the president’s indicated in the past that he sees this as the first step not a final one, you remember back in the 1980s Ronald Reagan had 2 big tax bills , one in 1981 another one in 1986, so I think in a couple of years we’re going to get another bite of this apple, especially if republicans keep the house, in next year’s congressional elections and increase their control of the senate, remember next year there are 25 democratic seats coming up in the senate, only 8 republican, if you have a vibrant economy you can easily gain 8-10 seats and by god if you get those 60 seats in the senate you can do a lot of good stuff and don’t have to worry about Phillip busters or the other obstacles that the liberals always throw up.

David Scranton: Sure so, we have to hopefully make sure that his, the grassroot efforts that he has created with his followers continues through the next senate election.

Steve Forbes: Absolutely.

David Scranton: So, who do you think is going to benefit the most from these tax cuts,

what’s your opinion on that?

Steve Forbes: I think if they go through with what he proposed then everyone is going to benefit from it , perhaps tax lawyers will have a little less work but that’s not a bad thing and they can spend more time with their families so can IRS agents but for the American economy, the American people, the American businesses it would be great, it would be great for the world economy as well because if we show the way in reducing tax burdens can revive an economy other countries will follow in our wake. Remember, back in the 1980’s when Ronald Reagan did his drastic tax cuts, 50 countries followed suit in the years after those tax cuts were passed, so it would be good for everybody except democrats maybe, who are on the far left, but democrats would be happy too.

 David Scranton: It would be good for them also, they just don’t know it quite yet but how about people who look at a Steve Forbes let’s say, or maybe even a David Scranton for that matter, and say well they’re benefitting the most, their top tax brackets are going down by 6.6% if you throw in the removal of the investment income tax , that’s another 3.8, so now you’re benefiting by 10%, how about those people who say we can afford to pay a little more and what if we did pay a little more, what if we paid a little bit more but congress actually did something that is never talked about these days, such as paying down the national debt. Now how would you respond to those sorts of claims from the left?

Steve Forbes: John Kennedy and Ronald Reagan demonstrated when you cut tax rates across the board, which is what Donald Trump is proposing in that tradition, not only does everyone benefit but the whole economy benefits ,we’re not trying to pick winners or losers and by increasing deduction, standard deductions for people they get more money in their pockets under the Trump plan they’ve made that very explicit , everyone is going to get a nice tax cut and then we also know that when we reduce tax rates that encourages more investment , we haven’t had a lot of business investments in recent years so it’s win win for everyone, don’t try to pick winners and losers , a rise in tide as John Kennedy said raises all boats and if you are worried about me and want to say Steve Forbes cannot participate in this tax cut fine, as long as the rest of the country is doing well , I’ll do fine too.

David Scranton: That’s right and I feel exactly the same as you do, so in the last 20 seconds or so we have left it sounds like what you’re saying is the tax plan is almost perfect if Donald Trump can negotiate a way this border adjustment tax then it becomes, pretty much a perfect tax plan. Is that your in a nutshell, is that your summary?

Steve Forbes: It’s a very good tax plan and it lays the foundation, as he said in the past for doing even greater things in the future, this will help get the economy off its back, we’re still in second gear, we do get the economy moving that’s creates a political capital for doing even more things down the road, absolutely.

David Scranton: Great, Steve, well, we’re out of time, time flies when you’re having fun, good luck recovering with your shoulder–

Steve Forbes: Thank you.

David Scranton: I hope you feel better and Steve thanks so much for joining us today.

Steven Mnuchin:  What’s important here is we want to deliver a middle-income tax cut we want to simplify personal taxes and we want to make business more competitive. Our businesses are uncompetitive they’re not on a level playing field and that’s why we have trillions of dollars of cash, sitting offshore, that’s why we have jobs being moved out of this country, we are determined to make US business competitive, that’s big business and that’s small business and we’re listening to what people have to say and we’re going to incorporate that into the plan.

David Scranton: You just heard from present from treasury SEC Secretary Steven Mnuchin discussing ‘trump’s tax plan. I said Mnuchin properly. I said it twice. There it is. The president is clearly trying to streamline taxes for both individuals, and corporations in total ‘trump’s tax plan as written would reduce federal tax revenue by an estimated 6.2 trillion dollars over the next 10 years, this according to the Tax Policy Center. While there is some speculation and criticism about tax reduction for the top wagers in America, many economists and businessmen like Trump believe that putting more money in the hands of business owners and decision makers is the key to growth, it’s a key to expansion and the key to prosperity for everyone. Party politics aside, Trump campaign on reducing the size of government, revenue available for federal programs would rank by somewhere between 4.4 trillion or 5.9 trillion dollars over ten years according to the tax Foundation. The missing ingredient, of course, in these figures has to do with economic growth, if Trump can achieve the 4% annual GDP growth that he is aiming for then his tax plan could work, corporations and small businesses would be paying less but they theoretically would be paying taxes on increasingly larger and larger profits year after year, percentage-wise that could fill the gap between the apparent shortfall that exists now between Trump’s revenue reductions and spending cuts, but what if that 4% growth doesn’t happen? It faces plenty of challenges which we talked about on a recent show called “Can Trump do it?”. It’s possible, of course, but right now it’s only a projection and the reality is that most projections are facts based upon fiction. As a financial advisor. I know this first hand, that’s why when I’m helping a client create a 30-year retirement plan, I limit my use of projections because if one variable changes then over the course of thirty years, the entire plan could be weakened or even completely rendered unviable. In fact, that’s why I ultimately became a specialist in Fixed Income, Strategies. There are simply fewer unknown variables, with fixed income. You’re less at the mercy of projections or the volatility of financial markets. Personally, I’d rather the Trump plan focus entirely on businesses, I’d rather see them implement the corporate tax cuts, but keep individual tax rates the same, that way with this proposed spending cuts in place the revenue stream from individual taxes could possibly, I know it sounds like a crazy thought, but very possibly go toward… yes, actually paying down the national debt, imagine that is a concept, that eliminates or at least greatly reduces the plans needed for his 4% growth in order to be successful, we simply don’t want to have a plan where the sun, the moon, stars all have to line up in a straight line for it to work. It eliminates the need for fact-based upon fiction. So, one might the success or failure of Trump’s plan mean for investors within tenures of retirement? Could it create new opportunities within your portfolio? or should you be thinking about making some changes soon? We’ll talk about that and much more, coming up on the financial advisors round table.

John Bachman: And welcome back to the income generation of John Backman. Here’s your NewsMax, finance update, a quick recap of the stories that move the markets this week. It’s not just Samsung phones that are under fire, pun unintended, according to those documents leaked by Wiki leagues, the CIA was using voice recognition software and Samson smart TVs to spy on people, even when those TVs were off. Market guru warns the recent bull market may be losing steam after his long honeymoon falling down on Trump’s election, the St-500 and the Dow Jones have been off a bit this week, after their march. First highs and Commerce Secretary will be Ross says, he doesn’t think an income tax on robots would reduce the threat of job automation. He says the right solution would be to better train the American workforce not to hold back technology and the editor of Forbes and real estate investor Brad Thomas recommends for high yielding reads or real estate investment trust for retirement that list includes Blackstone mortgage trust, Care capital properties, cataloguing and WP caring, and President Trump talks infrastructure spending with Tesla and SpaceX head Elon Musk during his presidential campaign, Trump, said he would push for one trillion infrastructure program to build roads, bridges, airports, and other public works projects for more of these stories, you can always visit NewsMax, or NewsMax slash finance rather, now back to David Scranton  with the income generation.


David Scranton: Thanks, John. Now, the draw-to-date, let’s hear from some other advisors in the field and get their insights on the benefits, limitations and potential dangers of the new tax plan. Let’s bring in our guests. Mike Burleigh joins me right here at the anchor desk, he’s president of Peak Capital Management in Judson Beach, Florida, and he’s brave, enough to be here because the flu or head cold or whatever it is that I’m getting and risking life and limb coming here in studio. He started his career in 1986, since then, he’s enjoyed helping thousands of clients learn how to play good financial defence and enjoy retirement. Those of us who are not quite as brave as Michael and joining us via Skype, we have Matthew Johnson and David Stern.  Matthew is the owner-president of Johnson Wealth and Income management in humble Iowa. He’s been an advisor now for more than 15 years, but his company goes back three generations, so helping people protect and grow their money is part of a long-standing family tradition for Matthew and David, is the president and founder of Stern’s retirement group, in Wal Kingsville Georgia, he specialized in working with retirees, and their retirees, for over 20-years now, he also has a lot of personal experience with planning for the future because he and his wife have. Yes, this is not wrong information, seven children. Thanks for joining us today, everyone.

Matthew Johnson:  Thank you.

David Scranton: The first question is, from a financial perspective, ‘trump’s tax plan, is it good, is it bad overall, what are your thoughts, Michael?

Mike Burleigh: Well, I like the plan, I think it’s a great plan. My only concern would be the debt, the debt how’s it going to finance this with the debt where we’re at —

David Scranton: National debt.

Mike Burleigh:   But I like that. I think it’s going to create a lot of jobs for the economy. I think it’s a great plan.

David Scranton: How about Steve Forbes claim that he just heard about the border adjustment tax? So, you think he’s making too big of a deal that’s okay or no?

Mike Burleigh:  I think that could be an issue, but overall, I think he’s got a good plan, whether he’ll get that down to 15% or not we’ll see or from 35? But maybe lined up around 20 but we’ll see.

David Scranton: Oh, the corporate tax, you’re talking about for sure. We’re going to talk about that a lot later. Actually, that’s probably the biggest benefit of the plan, at least it is in my opinion. Matthew let’s go to Iowa, and tell us about your thoughts here, about the plan. Overall, good? Bad?

Matthew Johnson: I think over all, the plan is a very sound plan, I think that there could be some degree of concern with regards to the imports and the cost and how that could affect the middle-American the average work Joe but let’s cross that bridge when we get to it. I think, overall, we see throughout history, whether you’re looking at Calvin College, whether you’re looking at Ronald Reagan when taxes go down that creates additional revenue and that trickles back to the average working person and do you know what more money in their pocket means they have more disposable income. So, it could be an issue, but I think overall, it’s a very solid plan.

David Scranton: Now, David Stern, the border adjustment tax though, a lot of people say that this is going to benefit the affluent more because the top rack, it goes down so much, and the average Joe is in Wal Kingsville, Georgia is going to get hit with this border adjustment tax. He’s going to be worse off. What are your thoughts?

David Stern:  Well, I’m not sure we actually really know, one of the things I think I heard Steve say was that it would help our exports, but my understanding is that this tax will potentially strengthen the US dollar, which might be for export, some of the people think that the strength in the US dollar will help off-set that tax, so in general, I think it’s probably not a bad idea.

David Scranton: A good point, good point, I think a dollar cut off set that. Now, just briefly, let’s talk about the corporate tax rate. Michael here in studio with us already said that’s a great thing and whether he gets to corporate tax rates from 35 to 15, or he gets compromised, back to 20, it’s still a lot better than it is right now. So, bottom line, Matthew, the corporate tax reduction, Good or bad? Can you think of any negatives or do you agree with us? It’s pretty much a good thing for hard-working Americans.


Matthew Johnson: No, I think it’s a very good thing. I think we see an awful lot of corporations moving abroad because they want to try to get away from those taxes, and so why not make the atmosphere here in America one that stimulates growth and we stimulate growth by having less tax burden. I think it’s an excellent plan.

David Scranton: Create more jobs. That’s what it’s all about, right? Creating more job. So, David, are you in agreement with us on this too, I can imagine.

David Stern: Well, you know, you got to spend money to make money, Dave and the critics say  it’s true, maybe in the first year without that big of a deduction in the corporate tax code, yeah, we’re going to have a big increasing our deficit, so you look beyond that and you look long term, sometimes you got to spend money to make money, in the financial engine of the United States really is business growth, corporate growth can be friendly or on the tax code to them the benefits will far outweigh.

David Scranton: Forget these corporate inversions get all these companies coming back to the United States, but how about the claim that it’s the more affluent individuals, that are benefiting the most top tax bracket going down by 6.6% of the investment income tax that came in on the Obama administration going away, capital gains being held down at 20% percent. What’s you thought on that? Do you think it benefits the wealthy more than the average?

Mike Burleigh: I’d rather see that 6.6 percent go to middle America quite frankly.


David Scranton: You rather have, you rather pay a little more tax yourself. Have people like, you know, myself and Matthew and David pale more tax and of course Steve Forbes so that the break can go to middle America.

Mike Burleigh: Well think about it, Dave, let’s take a scenario, where you have here in South Florida, you have a teacher and maybe a, someone in law enforcement.

David Scranton: A teacher, a police officer absolutely.

Mike Burleigh: Middle America. I think they would benefit much more with that 6.6% reduction than maybe you or I would.

David Scranton: Agreed, what are your thoughts now? I know Matthew I think you just mentioned a minute ago trickle down now trickle-down would argue with that. So, do you think that this is a bad thing that the affluent might get greater percentage of the tax cuts or do you think the trickle-down will work and it’ll go to Middle America?

Matthew Johnson: I think it’ll eventually make it to Middle America. I think the wealthy are the ones that drive the jobs in America, you create greater wealth for them, they expand their business, they hire more people and they put more people to work and to me it may not work immediately, but it will eventually start to trickle down.

Matthew Burleigh: Wait a minute, let’s put that 6.6% right in the pocket of Middle America now, that’s where it’s going to   make the biggest difference put it in their pocket today.

David Scranton: So, you’re saying give it to them directly.

Matthew Burleigh: Done correctly .

David Scranton: Matthew saying no no. no, just let’s let It trickle down David ,David Stern in the 30 seconds or so we have left. You’re the tiebreaker. What do you think?

David Stern: Well, I maybe a different perspective. I’m not so sure. I need to be so friendly to the ultra-wealthy in our country that 3.8% investment tax is only really increased their tax burden by about $23,000 a year. That’s not that big of a deal, most people don’t realize it but from 1936 to 1981 the top federal income tax bracket never went below 70% things taxes are on sale for the wealthy.

David Scranton: Yes, so at this point the affluent are still a heck of a lot better off than they have been recent times within history. So interesting, so we broke the tie, so David broke the tie, you know, you saw it right here on the income generation. I’m going to ask all of you to stick around and talk a little bit more after the commercial break. You’re watching the Income generation.

David Scranton: Welcome back to the Income generation. I’m David Scranton your host. Let’s bring our advisors back in we have Mike Burleigh right here at the anchor desk. We have Matthew Johnson and David Stern via Skype, thank you all for sticking around. Now Mike you threw me a curveball there just a minute ago, you know our guests here on Skype,  they come from very conservative States, remember the map on election night,  the red states the blue states? so they come from Iowa, they come from Georgia and Florida, technically is a red state but but you sounded a moment ago like a total left-wing liberal when you said give all the money to  the middle class let them have it.

Mike Burleigh:  Not so fast Dave not so fast. I’m not a left wing liberal. Let me explain it. I don’t know if your audience realizes to hit a 39.6% tax bracket, you know what your income is, if you’re single it’s over four hundred and twenty thousand dollars a year. Okay married, it’s almost a half a million dollars. How much difference is that going to make 6.6%.

David Scranton:  That’s right. We do you like that those people should get a little to pay for it in theory.

Mike Burleigh: Exactly and if you want to go take a vacation and drop $10,000, you can do it in a heartbeat today, you don’t have to think about that but the middle class, a young couple like I explained, that’s a big deal to them, that extra money in their  pocket could go towards their college fund for their children or it’s a retirement account, I think it hits home better at the middle class.

David Scranton: Okay, so gentlemen, so there’s hope for our good friend Michael who is here on set with me, he’s not the bleeding-heart liberal that we all thought he was perhaps a minute ago. So, what are your thoughts if there was one component   here that helps the middle class that helps the wealthy more that maybe if we had to      compromise and get rid of that. What would it be? What would you think, would you       rather get rid of the reduced capital gains rate? Would you rather and have it be a higher rate? Would you rather keep the investment income tax, or would you rather just keep the top regular income tax bracket at 39.6? In other words, gentlemen, if we had to pick one thing to give back to Congress in negotiating, that would cause the affluent to pay more tax to help the middle class. What would that be? I need your opinions Matthew, why don’t you go first?

Matthew Johnson: Well first I want to I want to go back to something that I think we haven’t really covered first and that’s the investment expensing. I work with a lot of business owners and the reality is I think that there is part of this plan that are that are immediately giving back to people. You know, if you’re a farmer, you’re a small business owner and you invest capital into your business, the ability of being able to immediately expense all of that capital investment in your business, that’s an immediate—

David Scranton:  Hold on, time out Matthew time out. I have to stop you there. We had this back in 2010 2011 and most people never took advantage of 2010, 2011. You could take 100% depreciation on an asset put into business into place for those two years and so few people didn’t do anything to stimulate the economy. So, I know your real aspirations are some day to run for governor of Iowa and run for politics, but try not to do the political thing here and dance around the question. Give me an answer of those things, what do you think is the thing that the most is a giveaway that we could push back to Congress and say Hey, you know, let them pay more ordinary tax or let it pay higher capital gains or let’s keep the investment in income tax. If you had to pick one out of three, which one would it be?

Matthew Johnson: If you force my hand, it would be keeping everything at the making the affluent pay more in ordinary income tax.

David Scranton: Ordinary income tax, okay now David and I appreciate that straightforward answer by the way Matthew now David, you know, he says ordinary income tax Matthew does an Iowa, you know, Michael right here sitting in studio said, well not so not so fast. It’s really only affecting people that are that are over 400,000 but yet there’s a lot of people today making $400,000 that that maybe aren’t living as comfortably as they were 20 years ago. What are your thoughts? Is that the give back or is it the capital gains rate or is the investment income tax?




David Stern: Maybe I’ll throw a wrench in the equation here. I first of all I think it’s a great question and I’m very much in favour of reducing the corporate tax structure and then  as we do that possibly changing the way that the those who make are making a lot of money on their investments, have them pay the taxes on those investments, an interesting part of this morning in the Wall Street Journal,  these guys were suggesting  that  that those dividends and interest in every, doesn’t matter what it is would be all taxes ordinary income in the year that they earn it and so I’m in favour of the wealthy, I wouldn’t have a problem keeping the 39.6 either. I feel like if we do what we’re supposed to do with the corporate taxes, we’re going to stimulate this economy, okay, and that’s what we got to do.

David Scranton: All right, I was about to accuse you by the way of running for governor of Georgia at some point in the future, I thought you were dancing around the question, but you did circle back and he managed to answer it so I guess my take on this and and I’ll give it to all of you right now my take on this is really simple, I think that you know at the end of the day keeping the capital gains rates a little bit higher isn’t a bad thing because it settles down our financial markets as opposed to people being day traders, not people buy and hold like they used to do in   the old days, they buy Investments that make sense over the long run. I think we should get rid of the investment interest tax because that hurts our clients the most, gentleman retirees and people near retirement who are earning interest and dividends, they’re getting hurt the worse and I hate to see that because they are the people who also need help the most as far as the average worker well like you said over 400,000 they can afford to pay a little bit more. So, thanks guys. I’m asking you to stick around again. We still have a lot more to discuss and for our viewers you stay with us also. We’ll be right back with the income generation.

David Scranton: Welcome back to the income generation. I’m David Scranton your host. Let’s bring back our advisors’ roundtable, we have Mike Burleigh here at the anchor desk plus Matthew Johnson and David Stern via Skype. Thank you all for sticking around. So, tell me in this new environment, how would you recommend that people plan to save taxes?  Matthew, what’s your best tax savings plan or do you not recommend you leave that up to the CPA?

Matthew Johnson: Oh no, Absolutely. I think you need to make your working capital work for you and although we never let the tax tail wag the dog we do as much as we can to invest in ourselves, to invest in our retirement before we would ever give a dollar to the IRS.I believe the effort of President Trump right now is to try to put a focus on less tax burden and he understands like Reagan that when the government gets less, people spend more and it always ends up coming back into a better environment for growth in the country. So, invest in themselves, take tax deductions as you can find them and use them appropriately.

David Scranton: Take all the legal tax deductions you can when it comes to investments or anything else but the end of the day, you’re obviously a big trickle-down component and luckily you’re on a conservative talk show, otherwise, you might get a lot of pushback. David Stern, what’s your take in this new environment? How do you coach people on saving income taxes as they’re retired or approaching retirement?




David Stern: Well, just some ideas that you know, I talked earlier about how I feel like taxes are on sale in the United States when you consider back even 1944 and 45 when those over 200,000 income paid 94% so one of the things I try to get my clients to think about that a lot of qualified money, is to consider trickling out some of that money now rather than waiting until they’re 70 and half just to spread it out in case tax brackets, but even more that’s one of the ideas the other thing would be investing for income with getting some dividends, which are to be tax more  favourably if they’re qualified dividends as long-term capital gains and then maybe even deduction bunching some strategies like that  where they can bunch some of the deductions right at the very end of the year for next  year, prepay them and this year might also say that syntax.

David Scranton:  That’s great, you’re talking about dividends the reduced rate, a lot of things you could do reasonably conservatively dividends. That’s a great strategy and also quite interesting that you were saying, maybe take some money out as a back-up plan now in case taxes go up in the future very good point, you know, if if he hits his 4% marker and if that’s enough with repealing Obamacare to pay for these tax cuts, great, but if not, then you’re absolutely correct David that tax rates are likely to go up a lot in the future and we need to protect ourselves against it. So, with tax rates are low, it’ll take advantage of it. During the Reagan Administration for example there were plenty of  years there where people took taxes out of a virus and qualified plans at a lower tax bracket in retrospect, that would have been a smart plan. I know a lot of people kicking themselves for not having done that, so thanks guys, I’m going to ask you all to stick around. We have a lot more to talk about when we return stay with us. We’ll be right back.

David Scranton: Welcome back to the income generation. I’m David Scranton your host. Let’s bring our advisors roundtable back in we have Mike Burleigh, here at the anchor desk plus Matthew Johnson David Stern via Skype. Thank you all for sticking around, Michael, now, you’ve been around long enough. You remember the Reagan Administration and   that 28% top bracket, now some people kick themselves, you know. All right, you share David’s Stern’s concerns that brackets might go up if Trump can achieve the 4% growth. Maybe it’s a great chance to take advantage and pull some money out and lower tax bracket.

Mike Burleigh: Well, I think the good news is we’re going to have some certainty for the next four years. So we will be able to do some tax planning for the next four years at least, the bad news is we just not certain where these brackets are going to fall yet, So with any kind of luck we should know something maybe towards the middle end up before the end of the year so we could maybe put some deploy some of these strategies.

David Scranton: So, the last 15 seconds or so, we have together tell me, bottom line. What are the strategies you think your average retiree or person approaching retirement can use under this new tax plan to save taxes now?

Mike Burleigh:  I’ll defer an income, tax free income and defer it where you can.

David Scranton:  Tax free, so reduce the tax rates with dividends, tax free incomes versus things like municipal bonds and defer it where you can. I love it, I love it, that’s great. So thank you all for joining us today, we’ll have you back again soon, I promise you all been great, before I like to go. I’d like to thank Steve Forbes as well as his week’s guest advisors like also to thank all of you, our new and returning viewers, we’re living in uncertain times right now and like so many things about the economy and the financial markets, the Trump tax plan is simply an unknown even if it   goes into law with few or no changes the unknown elements will remain, and they will remain to be unknowns. It’ll take time to see if the crucial growth projections it depends upon really occurs, or if it ends up being what is right now a fact based upon fiction, in the meantime, make sure you’re ready. Take a good hard look at your own financial strategy. Is it overly dependent upon a lot of mites and navies and possible? or is it filled with a lot of facts based upon fiction? or is it based on hard numbers, relevant facts, and secure strategies geared toward protection and income? thanks for watching.

David Scranton: If you’re near or in retirement head over to the income generation and download your special report written specifically for the So the income generation again those born before 1966. I’m David’s Scranton and you’ve been watching the Income generation.




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