Key Takeaways:
The Four Capital Taxes
Current State of Capitals Tax (0:45): The American Families Act
Make more than $250,000 - 20% plus a 3.8% surtax.
The federal, state, local (in some parts of the country like NYC) and the ObamaCare surtax of 3.8%.
Income greater than $1M will see a capital gain increase from 20% to 39.6% if the proposal passes.
Example: New York City: 58.2% Portland, OR -57.3%.
Is This Likely To Pass?
Insiders feel a 28%-29% tax rate will be agreed upon.
The 39.6% offer might be a negotiation tactic.
A 39.6% + 3.8% = 43.4. We would be the country with the highest rate in the world.
Strategies To Address This Risk:
Quit putting huge amounts of money in your taxable bucket. You will pay tax on the dividends.
There are more efficient places to park your investments. Few clients take advantage of tax-efficient investing.
Roth 401(k) -$26,000 a year (over age 50).
Roth IRA (min 9:15 of the video) - $7,000 a year (over age 50) on top of the $26,000 invested in the Roth 401(k). Leave some money in the IRA so you can take advantage of your standard deductions.
Roth conversions.
Life Insurance as a Strategy:
Life insurance (min 10 of the video)- a) safe and productive growth, b) a floor so no market losses; no loss of your money, c) tax-free growth, and d) a death benefit that doubles as long-term care.
The Life Insurance Retirement Plan - becomes the receptacle for all the money that would normally be destined for your taxable bucket.
No income or contribution limits.
You could be impervious to the capital gains taxes.
No stock market risks.