Simon Says

I follow Simon black on a daily basis.  He is a successful international businessman who has a good understanding of what is going on these days.   With a new government and president comes a lot of questions.

A- What is going on?

B- What should I do about it.

Let’s start with A- What is going on?  Your taxes are going to go up, your freedoms are going down.  Some of his observations are worth noting.

“At the state level, places like California have proposed all sorts of idiotic ideas, from hiking the already-high individual and corporate rates, to a statewide wealth tax, to even an ‘expatriation tax’ for anyone who leaves California.

The State of New Jersey is chasing away its highest income earners by raising taxes from 8.97% to 10.75%, and dropping the income threshold from $5 million down to $1 million.

What a surprise– wealthy people and businesses are leaving California and New Jersey!

Then there are all the new ideas for federal tax policy, many of which are colossally stupid.

This week the Biden administration plans to unveil a proposal to tax up to 43.4% of capital gains, even though the history of taxation in the United States shows that capital gains tax increases actually result in LOWER tax revenue.

Plus many politicians still want to tax ‘unrealized’ capital gains, i.e. you have to pay tax on an asset that has appreciated in value BEFORE you sell it. Genius.

In addition, they’re working to not only raise corporate taxes, but to push other countries around the world to raise their corporate tax rates as well.

In addition, they’re working to not only raise corporate taxes, but to push other countries around the world to raise their corporate tax rates as well.

And last month I outlined their new proposal to raise estate taxes, AKA the death tax.

The legislation wouldn’t just raise the percentage of an estate the government takes. It would also lower the exemption to just $1 million, which is sure to affect small family business.

With even just a few of these changes taking place, many people will be paying upwards of 50% to 60% between state, local, and federal taxes.

And let’s be honest– the decisions about how they spend it are appalling.

These are the same politicians who spend billions of dollars to build a website that doesn’t work… or who pay people to stay home and NOT work to save everyone from a virus with a 99% survival rate.”

Now with B- What can I do about it.

One of the reasons that I moved to Panama was I figured after paying millions in income taxes over the years, I have paid enough especially when I realized what had happened to the government and the country I left behind.  Some people are watching Puerto Rico where there are still plenty of ways to legally reduce what you owe; you can set up a more robust retirement plan and maximize contributions, for example, potentially taking tens of thousands of dollars per year off the table.

Like Panama you have the opportunity to take advantage the Foreign Earned Income Exclusion.

From a financial perspective, reducing your tax burden is the easiest return on investment you’ll ever make…

If you can cut your taxes from 30% to 10%, you’ve just achieved a risk-free, 20% return on investment. 

The Foreign Earned Income Exclusion allows US taxpayers living abroad to earn $108,700 this year, tax free, and married couples $217,400, plus receive extensive tax benefits on their housing.

I have touched on but a few of his ideas but probably the most important thing to recognize is that this is not the time to procrastinate. If the last year has taught us anything, it’s that everything can change VERY quickly.

Stay Safe!!