The Buffet Tax

//The Buffet Tax

In 1969, Joe Barr, the last of LBJ’s Trea­sury Secretary’s (he served only 30 days) became famous. He tes­ti­fied before Con­gress that 21 mil­lion­aires had paid no income tax in 1967. A tax­pay­er ‘revolt’ was at hand.

Con­gress, in an effort to chase down those 21, cre­at­ed the Min­i­mum Tax of 1969. Ulti­mate­ly this became what you and I know as the Alter­na­tive Min­i­mum Tax. The unin­tend­ed con­se­quence of this bend­ing of tax pol­i­cy is that AMT now impacts four mil­lion tax­pay­ers, 27% of whom have AGI below $200,000 per year.  But I digress.

Whether you agree with Mr. Obama’s premise that too many bil­lion­aires pay too lit­tle tax is not the point. Our tax sys­tem is com­pli­cat­ed, thus enabling finan­cial insti­tu­tions to cre­ate tax reduc­tion strate­gies and prod­ucts. Too many Amer­i­cans rely on these pas­sive strate­gies in the name of tax sav­ings.  Remem­ber this: “Tax­es can­not be reduced by tax-advan­taged finan­cial instru­ments alone!” It is only through a well-coor­di­nat­ed and inte­grat­ed process along with a sound eco­nom­ic process that tax­es can be tru­ly reduced both now and in the future.

Oh, and an econo­met­ric mod­el that will allow you to test these proven strate­gies.

My pre­dic­tion: regard­less the out­come of the cur­rent tax debate, too many Amer­i­cans will over­pay their tax­es this com­ing year sim­ply as a result of the posi­tion­ing of their assets, cur­rent volatil­i­ty of the mar­kets, and the turnover in their tax­able port­fo­lios. Don’t rely on the gov­ern­ment or tra­di­tion­al finan­cial plan­ning strate­gies to pro­tect you. You must do some­thing now to lim­it this expo­sure.

If you don’t…prepare to be ‘Buf­fet­ed.’

 

2011-09-30T11:25:16+00:00