Friday, June 22, 2018

Wealthy hide their assets in tax-FREE foundations


New ways the wealthy avoid taxes that we have to pay for them
The Trump tax breaks did not reduce the amount the well off can deduct from their taxes. The rich get richer. We have to make up the loss of govt revenue since the rich use the courts, police, military, roads, airports, etc. They can deduct the amount they give their own charitable foundation and have the foundation buy the things they like to have. If they like old cars, old bicycles, old antiques, art of any type, they have their foundation charge it. They can control when they let others see their stuff too. There are a growing number of private tax-exempt exhibition spaces that use this model. As the founder, they can deduct the full market value of any art, cash and stocks they ‘donate,’ even when the museums are just a quick stroll from their living room. “I think these types of deals do not follow the intent, even if they follow the letter, of the law,” said Rebecca Wilkins, senior counsel on federal tax policy at the Institute on Taxation and Economic PolicyRobert Storr, dean of the Yale School of Art, worries that some collectors are exploiting a legal loophole without fulfilling a broader mission of education or research. It is unlikely that the IRS will get tough since its boss uses his foundation in this manner—his foundation buys his own portraits to put in his own businesses. Private foundations may be the biggest scams ever. US is home to many tax havens like this.

Why do we pay tax on Social Security Benefits?
Taxpayers who receive income besides SS benefits may have noticed that they must add some of their income from SS to their taxable income on line 20b of Form1040 or 14b of Form 1040a. For those working and receiving benefits, up to 85% of the benefits may be taxable income. Why do we pay tax on our benefits since we paid for the benefits (FICA tax) all our working lives? This is the progressive income tax. Those who have more income in retirement pay tax on more of their SS benefits. If we wish to reduce the tax on our income we have to reduce our taxable income. We can do this starting before or after retirement by funding a tax-FREE trust account at any financial institution. We can also convert IRA money to this account at the firm where we have our IRAs. We can convert any part of our IRAs as well as contribute if we are still working. So whether working or retired, we can make our long-term savings and investments into income that we no longer pay tax on. Tax-FREE income means we lower the amount of taxable SS benefits. When we must begin withdrawing our pension, 401k and IRA money, converting it to tax-FREE income is one of the ways we can use our withdrawals after age 70 (RMD) if we don’t need it for expenses.

Are you subject to quarterly estimated income tax payments?
If you are both retired and receive RMD, pension, SS benefits, part-time work earnings, or any other income, you may have to pay what you may owe the IRS each quarter during the year. For example, your required RMD is $12,000, your pension, SS benefits and $15,000 non-employee job have no federal and state income taxes withheld for the IRS. You must either have one or more of them withhold tax or you have to send in the money with Form 1040-ES. The IRS likes the payments in 4 equal measures. If you receive your income all in one period—RMD, pension and part time pay all come in December, you will need to ask for the waiver of penalty on Form 2210 with Schedule AI on your return. The most common solution is to have one of the payers withhold and send it each month or quarter.


SCAMS: Beware illegal unregistered securities scheme
Brokerage firm LPL was caught selling illegal unregistered securities and not supervising brokers for years. The Securities Act of 1933 requires that investors receive valid information about the securities they are sold and that sellers don’t mislead investors about them. This is accomplished by the registration of all but govt securities sold by the firm. Various tricks are used to offer these investments for sale. The firm may have registered a version of the security but not the one you buy. Remember the 2007-8 mortgage backed security scandal in which the packages of MBS were put together with little information about the sub-prime loans inside them. Or consider the Master Limited Partnerships units being sold by many firms. It is not always clear what is being sold: tax benefits, timeframe and rights of the limited partners are obscure. Statements can be altered to make securities look legit. Don’t accept vague promises or values.
Lesson: don’t assume your broker is offering you a legal deal if 1) the deal is great—above the market returns; 2) the firm or broker has a record on BrokerCheck; or 3) you don’t verify your money went to place your broker claims. In this case, you can confirm the registration at https://www.sec.gov/edgar.shtml. Unfortunately, the industry has little oversight of the supervision of their brokers. Investors must file for arbitration when they suspect they are mislead or defrauded. The firm’s culture is all about making money--caveat emptor and white collar crime is NOT a priority for Sessions and Trump.

Your broker wants commissions upped with the ‘Fiduciary Rule’ dead
Merrill announced it may bring back commissions to gouge out seniors’ retirement money with complicated annuities and other ‘packaged’ products. The reason Obama instituted the fiduciary rule for salespeople was that unwary customers were being cheated out of $17 billions. The products are complicated for a reason—to protect the brokerage firms and the manufacturers. The regulators have more complaints about annuities than almost any other product. The Rule is grounded in the procedures used by trust companies as they administer trusts: do what is best for the customer NOT for the seller. Thus we had a better chance of learning the downside to products and the sellers’ conflicts of interest. The most recent violations: FifthThird was caught ‘twisting’-- exchanging an annuity they already had commission from for a new one with new commissions. They claimed the new one had benefits it did not have. A small fine with ‘no admission of guilt’ means they can commit fraud “misstatement” “mislead” again and no one goes to jail. Simple is best.

New study shows our losses from trading, fees, taxes vs index fund
After 25 years of study, Research Affiliates has found that taxes are still the largest drag on investment returns. Arnott’s research found that the tax and fee burdens of active and factor funds destroys their ability to beat their benchmarks. Cost matters. In the period from Jan. 1, 2008, to Dec. 31, 2017, active funds outperformed their benchmarks by an average of 0.7 percent gross of fees, but lost ground to underperform by 0.4 percent net of fees, underperform by 1.5 percent after internal taxes before liquidation, and underperform by 1.9 percent after capital gains taxes post-liquidation. The internal tax expenses caused by the turnover of active mutual funds still weighs on investor portfolios. Smart beta funds, on the other hand, outperformed their indexes from 2008 to 2017 by an average of 1.2 percent gross of fees and 0.6 percent net of fees, but underperformed by 0.1 percent after taxes pre-liquidation, and by 1 percent after taxes post-liquidation. Pay less; keep more.

Buffett credits ‘compounding’ for his huge successes
Buffett’s company, really a mutual fund, has returned 19% a year earnings because his assets compound earnings year after year with little trading. His firm has owned stock in Coke, American Express, Bank America, Wells Fargo, and others for a long time. Some are worth 20 times what he paid for them. His firm owns GEICO, KraftHeinz, BNSF and others. Compounding is the name of how business grows when you plough profits back into the business. Coke is now sold in almost every village in the world. Patience is hard to come by these days but it can answer our investment questions. Millionaires increased their wealth by over 10% in 2017 from an improving global economy and strong stock market performance. It was patience not working 10% more hours. 

Unhappy with your auto insurance?
Maybe you are not alone. JD Power asked customers how they felt. Certain states have preferences for sure. Progressive has saturated the TV with cute commercials but their ratings are average. Most regions have a local favorite, beating the national brands.
CaliforniaAmeriprise
Central: Shelter
FloridaMetLife
Mid-Atlantic: 
Erie Insurance
New EnglandAmica Mutual
New YorkNew York Central Mutual
North Central: Auto-Owners Insurance
Northwest: PEMCO Insurance
Southeast: Farm Bureau Insurance—
Tennessee
Southwest: CSAA Insurance Group
TexasTexas Farm Bureau
If you are shopping for lowest cost, remember to ask for the discounts that fit your situation. Sometimes ‘bundling’ auto and home is MORE expensive. Bundle umbrella liability with auto cover to save. Shopping for auto cover every 2-4 years makes sense because your needs and the insurers’ needs change. However, in old neighborhoods, home insurers reward longevity—no claims for years.


Get your grandchild started
The combined wealth of millionaires worldwide topped $70 trillion for the first time in 2017, according to Capgemini’s World Wealth Report 2018. The report attributed the rise in wealth (an increase of 10.6 percent over 2016) to an improving global economy and strong stock market performance. The number of millionaires also grew 10 percent, up 1.6 million to 18.1 million. The United States continues to be home to the most millionaires, with 5.4 million, up 10 percent from 2016. That’s followed by Japan, Germany and China. Those top four markets account for 61 percent of the world’s high-net-worth individuals, USA Today reports.



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Make America,The Don” Great Again



Only a criminal looks to a pardon for a defense


Constitution: no clause for ‘absolute right’ to pardon

“He speaks and people sit up at attention,” Trump said. “I want my people to do the same.” Bible has slavery verse too



Trump thinks the govt is ‘conspiring against him.’


Trump gives Putin control of election: eliminates U.S. cyber advisor
Treason definition: ‘giving them aid and comfort within the United States



The election is going to be rigged—I’m going to be ‘honest’” 


Can Trump postpone Nov 2018 election using excuse of Putin meddling needs fixing?
Elections compromised by Russia, big money, media, liars.


Two Americas: Banana Republic?


Will Supremes make America a dictatorship? Trump’s appointee Gorsuch is GOP


Middle class shrinking: wages for ‘nonsupervisory’ jobs falling even in great market
            Men are no longer in the workforce. 31% vs 14% in 1950 are not contributing.
            Number of products NOT made in America is growing: cheap labor, automation
           


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Trump’s mob infighting: Cohen wants Trump to pay his legal fees—RNC out of money?

SCAMS/SPINS:

Ami Forte Morgan Stanley caught ‘churning’ elderly client account: $34 million award
JPMorganChase caught trying to fix interest rate derivative index: $65 million but no jail.

Terry Lee McCoy Morgan Stanley caught ‘churning’ elderly client $9 million in fees
Ronald Fossum, Snohomish WA caught stealing client funds with unregistered securities.
First Nationle Solution, United RL Capital Percipience Global caught: lied ‘guaranteed returns’

Trump mob makes money on US decisions before we can—insider trading par excellence
Waiver from tariffs process allows mass cheating by Trump’s mob/friends/lobbyists

Where American stuff is really made: Sam Adams beer: old Schaefer plant, PA

Jobs:
Trump: "space is a war-fighting domain, just like the land, air, and sea." Enlist today!
Playing video games half a day is now a mental illness not an after school job.

Top firms hire top health officer to run co-op for employee health: SinglePayor model?
TX deputy refuses to help herd prisoners like in Gitmo: “I think it’s wrong” ‘unGodly’

Who owns your account now?
FREE money: Find your old 401k account with help-- pbgc.gov/ or pensionhelp.org/
Get robo call from your own mobile? Or ‘neighbor’ you never called? They steal any #.


Can we trust Ari Melber to explain the legal case against POTUS? Steele?

Miracle:


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