“The hardest thing in the world to understand is the Income Tax.”
⦁ Albert Einstein
“Make sure you pay your taxes; otherwise you can get into a lot of trouble.”
⦁ Richard Nixon
The US debt is at 28 trillion dollars and tax revenue is at 3.42 trillion. The current level of spending is at 6.55 trillion for 2020. The US budget has a 3.13 trillion deficit! Granted, 1.76 trillion of the deficit was due to the Cares Act and the three other stimulus measures. But these numbers are staggering. We have more debt than there are stars in our galaxy by 70 times!
So now you’re asking why am I trying to ruin your day? You were just fine not knowing that. Before you throw away this newsletter, let me make the point, whether we have Democrats or Republicans in office we can expect taxes to go up in the future. Maybe sooner with the present political landscape. The current tax code is very low in comparison to other time periods.
Source: USA Historical Marginal Tax Rate for Highest and Lowest Income Earners.svg
We are talking about income taxes, taxes on social security benefits, estate taxes, increased capital gains, dividend income tax, federal sales tax, increased RMD’s, corporate taxes and even wealth taxes have been suggested.3 (Elizabeth Warren, D-Mas.) has introduced legislation for a wealth tax)
What can be done? There are several strategies that you can take to reduce taxes. Some strategies require paying some tax now (while rates are low) to avoid future taxation completely. (Example, ROTH conversions.)
This kind of planning works best when we have a favorable tax season. Some strategies may take years to execute. Waiting too long is like the boat in the picture above deciding to drop its sails as the storm approaches. It’s too late, disaster has arrived.
Let us have a friendly visit to discuss your individual situation and strategies that may be available to you before the Tax Tsunami is upon us.
Toro Bravo Super Bowl LV Commercial
In anticipation of re-starting our popular public events (Social Security: How the lessons of Apollo 13 can help your retirement and The Retirement, the Heirs, and the Tax Witch), we decided to run some commercials through Channel 10.
One of the commercials came out so well that Channel 10 asked if we would show it during the LV Super Bowl (for an extra charge, of course). It debuted after the 3rd quarter and was broadcasted in the Amarillo area only. (We didn’t want to pay the $5.5 million for nationwide viewing of our 30 second commercial.)
We received many positive responses to the ad.4 One question was, “Who is the adorable little girl?” She is our own Executive Office Manager, Haleigh Caldwell’s 3-year-old daughter. The commercial came out better than we could have hoped for and she may have a career in acting.
We are also doing interviews for Baby Boomers Talk as well. You can see these online at https://www.newschannel10.com/babyboomerstalk/.
What is a Fiduciary?
Today’s political landscape is focused on regulation of business. The usual reason is to protect the consumer, provide for employees and uphold the integrity of markets. There is a drive for more and more regulation. Some use this issue in an effort to social engineer our society to match the values or world view they embrace. That is why when the topic comes up battlelines quickly get drawn. One issue in finance is if your Advisor is a fiduciary. (See footnote 5)
The reason this is a big deal, is the concern that interest of the company or advisor may work against your interest. For example, broker may offer certain funds that provide the broker a revenue sharing agreement or he sells proprietary products (that have higher revenue for the broker). There are many more issues that are ‘conflicts of interest’.
In retail finance your financial advisor isn’t always a “fiduciary” in the legal term. If you hire a “fiduciary only” advisor, this may limit the investments or financial products that can be offered to you. Some investments might make better financial sense when purchased from an agent or broker. So, what is your best course of action?
We recommend a retirement plan before investing. This way you can get a clear view of what works in your best interest. We do not charge for this service since it helps guide the investment recommendations and type of relationship.6
As Wealth Managers we are a hybrid advisor. Toro Bravo Investment Advisors, LLC is a Registered Investment Advisor that provides fee-based discretionary investment management in addition to advisory and planning services. In this capacity we operate as a fiduciary.7 (We manage Texas ORP/TDA accounts in the same fashion but through the RIA at Crown Capital Securities.)
When we offer Life Insurance, Annuities and other Broker offered investments or products, this done as an insurance agent or a broker (not by Toro Bravo). A commission is usually involved and is not a fiduciary relationship. These insurance products or securities are offered through Crown Capital Securities. (See disclosures on the page 1)
It is important to discuss the differences in determining the relationship that is in your best interest. Further, forms CRS and ADV2 provide clear disclosures and list any conflicts of interest that exist. (Let us know if you need another copy.)
Our purpose is to provide service, advice and solutions that help you to grow or protect your wealth. As an independent firm and advisors, our goal is to lower the ‘wall street conflicts’ that exist at other firms. No firm can eliminate conflicts entirely. We believe by knowing you and your values, we can help work in your best interests.
Sources Citations Bibliography:
⦁ https://www.thebalance.com2020 Federal Budget Summary
⦁ Milky Way Galaxy contains estimated 400 billion stars.
⦁ RMD- Required Minimum Distribution. A minimum amount of money required to be withdrawn (and taxed)from a retirement plan like an IRA starting at age 72.
⦁ To view go to our website or our facebook page @ torobravoadvisors
⦁ A fiduciary is a person or organization that acts on behalf of another person …, putting their clients’ interest ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other’s best interests.” -Investopedia
⦁ Not all clients may opt for a comprehensive plan. Our Investment Policy Statement provides retirement direction.
⦁ This allows us to buy and sell investments on your behalf without your direct input.
⦁ We can operate as a Fiduciary only, by your request.
Supplemental Disclaimers:
This article is informational only and is not investment advice. This is not an offer to buy, hold, or sell investments like securities or insurance products.
Securities and Investment Advisory Services are offered though Toro Bravo Investment Advisors, LLC. Life Insurance and Annuities sold as an insurance broker are not a fiduciary relationship and are not offered by Toro Bravo Investment Advisors, LLC.
Securities or Insurance are not FDIC/SIPC insured and investments contain risk plus could be subject to loss.
Losses could be short term or permanent. Numbers and figures illustrated are hypothetical in nature and past performance is not a guarantee or indication of future results/performance.
We are not affiliated with the Social Security Administration (SSA), Internal Revenue Service (IRS), or any Governmental Agency.
Do not rely solely on the Legal, Tax, or Financial information presented for it may not be suitable for your individual situation.
Consult your legal, tax, and/or financial professional before acting on any strategy or recommendation (i.e. major changes or before initiating the purchase, hold, or sale of any investment or investment strategy). Every individual’s strategy can differ depending on current circumstances and goals.