Voters in Multiple States Choose Higher Taxes for the Wealthy

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Of course, the big news from the election earlier this month was that Donald Trump shocked the world and defeated Hillary Clinton in the race to become the 45th president of the United States. However, there were several other important national, as well as local, election races and issues that were decided on November 8th. Not the least of which were several state measures aimed at raising taxes on high net worth individuals.

To that end, voters in both California and Maine decided that the rich needed to pay more taxes. In Maine, the vote to raise the state’s top tax rate from 7.15 percent to 10.15 percent was extremely close, passing by a narrow 50.4 percent to 49.6 percent margin. That means Maine will have the second highest top tax rate in the country in 2017, surpassing Oregon, which was number two in 2016 at 9.9 percent.

In California, meanwhile, the vote wasn’t even close, with 62 percent voting to extend temporary tax hikes already in place. Proposition 55 extended the hikes originally implemented in 2012 with Proposition 30. That means top earners, those who make $1 million or more a year, will continue to pay a tax rate of 13.3 percent at least until 2030. California will continue to have the highest tax rate for top earners in 2017.

So, while all signs point to Donald Trump lowering the federal tax rates, if you live in California or Maine and you’re a top earner, you won’t see any relief in the coming years in your state taxes.

http://www.forbes.com/sites/ashleaebeling/2016/11/10/voters-okay-state-income-tax-hikes-for-the-rich/#71480a7b16d0

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U.S. Treasury Making Push to Keep More Corporate Taxes Home

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For any company considering a tax inversion, the latest news form the U.S. Treasury will likely make it reconsider. Tax inversions, which are used by American companies to reduce their tax bill, occur when a company acquires or opens a subsidiary in a foreign country in order to change its tax address and save millions. Many companies have employed this tactic in recent months, which has caused the government to increase its efforts to stop them.

According to the Treasury Department, the new regulations are aimed at fixing the country’s broken tax system. Specifically, the new regulations from the IRS and the Treasury will seek to put an end to the “earnings stripping” process. This occurs when a company pays deductible interest to an affiliate or parent company in another country, which has lower taxes.

While many corporations have expressed displeasure with the government’s efforts the current White House administration, along with the IRS and the Treasury, has pushed forward to make these changes, especially to target earnings stripping. The department did announce that it would offer a “broad exemption” for short-term loans and cash pools. It also said the effective date won’t be until January 1, 2018, so companies will have more time to prepare and comply with the changing regulations.

You also might like How Much are U.S. Companies Paying in Corporate Tax?

http://www.cnbc.com/2016/10/13/treasury-takes-its-latest-step-to-keep-corporate-taxes-in-the-us.html

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Why Are the Wealthy Paying Fewer Estate Taxes?

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The estate tax was a hot topic throughout the election process and now that we have a new president-elect it’s sure to get an even closer look when White House leadership changes hands early next year. Or course, both candidates had different views regarding this tax, but it’s interesting to note that despite the possible changes that could be coming, there might be very little actual impact to the revenue collected from this tax.

It seems that many high-net-worth individuals have found ways to reduce their estate tax bill, without the help of any new policies. Why is that? How are wealthy individuals avoiding paying more in estate taxes? According to the most recent numbers available from the IRS, taxpayers paid $16.4 billion in federal estate taxes in 2014. Compare that to 2006 when the total was $24.6 billion and it’s clear that the numbers are in decline.

The fact is estate tax dollars only account for 1 percent of all revenue collected by the IRS. So how are the nation’s highest earners – especially those in the top 1 percent – paying so little in estate taxes? One big reason is the increasing number of exemptions that now exist. First off, the exemption threshold has increased to $5.5 million, so anyone who receives less than that is excluded. The top tax rate has also fallen from 70 percent in 1981 to just 40 percent today.

Wealthy taxpayers have also learned how to avoid this tax, by implementing many different estate-planning tools, including trusts, like the grantor-retained trust, to help make passing their wealth on much easier and more tax-friendly. Therefore, unless a massive overhaul of the estate tax is implemented it’s likely that wealthy taxpayers will continue to avoid it, or at the very least, minimize its impact.

You also might like the article Estate Tax Repeal of Revision?

http://www.cnbc.com/2016/09/23/how-the-rich-are-paying-less-in-estate-taxes.html

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Want to Avoid Taxes in Retirement – Try This

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There’s been no shortage of thoughts and opinions regarding Donald Trump’s tax returns since the election process began, especially since his leaked return hit the mainstream media a few weeks ago. One could argue at length regarding those numbers and whether or not they paint a positive picture of Trump and his finances. However, there’s no question that Trump was able to use his losses to help offset gains in years to come.

This is just one of many tricks that the wealthy use to help reduce their taxes in retirement. There are several others that both the wealthy and the everyday average taxpayer can use to help offset their retirement tax bill. One of the most obvious is by using an employer retirement account, which helps offset taxes now and when you’re done working. In addition, you can open a Roth IRA, which is an excellent way to save after tax income. All Roth IRA withdrawals are tax-free once you’ve owned the account for five years and you are at least 59 ½ years old.

Having a health savings account is also a great way to save. The money you place in an HSA is pre-tax so you won’t get hit upfront and it’s tax-free when you withdraw it, as long as you use it for medical expenses. Given that most people experience more health problems in their retirement years than earlier in life, this is a great tax savings tip to save you money.

These are just a few of the ways to help save money on your retirement taxes, but there are several more, including using long term capital gains, your home equity and a charitable remainder trust. If you have more questions about tax savings in retirement then please contact GROCO today.

You also might like How to Save on Tax in Retirement

http://www.forbes.com/sites/financialfinesse/2016/10/09/how-to-be-like-trump-and-avoid-taxes-in-retirement/#7ee1313f5e95

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How Much Are Fortune 500 Companies Saving in Taxes?

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It’s a well-known fact that many of the richest companies in America have become so financially successful thanks in large part to the tax-savings methods they employ, not the least of which is keeping large amounts of income overseas. These American companies have no problem doing business stateside, but because the U.S. has some of the highest corporate tax rates in the world, they can save millions in taxes by leaving that money in the country where it was earned.

In fact, according to a recent report from Citizens for Tax Justice, the largest Fortune 500 companies in America are storing as much as $2.5 trillion in foreign countries, which is $400 million more than last year. This is not hidden money, stored away in secret bank accounts, mind you, but rather revenue legally earned and held overseas. So why not bring the money back to the U.S.? As long as it stays overseas where it was earned the IRS can’t tax those earnings.

Of course, some people feel that isn’t fair, including the organization Citizens for Tax Justice, which wants the government to tax all income earned by U.S. companies, no matter what country it’s earned in. The problem with that scenario is that companies might decide to simply move their headquarters to other countries in order to avoid this extra tax, which could cost the country even more tax revenue, as well as jobs.

President Obama has recently proposed a 19 percent global minimum tax, which means any foreign subsidiary of a U.S. company that pays at least 19 percent in overseas taxes would be allowed to bring that money back to America without being taxed again stateside.

Of course, both current presidential candidates have their opinion on the matter. Donald Trump wants to significantly lower the corporate tax rate and combine it with a one-time 10 percent tax on any income being held in foreign countries. This could help give companies more of an incentive to bring the money home to the U.S. Hillary Clinton reportedly wants to keep the current standards but she also wants to add an “exit tax” for companies that leave.

Either way, it’s likely that companies will continue to keep foreign earnings overseas unless the government creates a more tax-friendly environment for American corporations.

 

You also might like the article Study Shows Benefit of Lower Corporate Tax

 

http://fortune.com/2016/10/06/fortune-500-tax-haven/

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How Would Proposed Tax Plans Affect the Country’s Economy?

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We’re just days away from the election and it’s likely that most Americans will just be happy that it’s finally over, no matter whom or what they voted for. However, there are some very important things at stake in this election, including how each candidate’s tax proposals would affect our nation’s economy, as well as the affect on individual taxpayers’ pocket books.

The overwhelming belief is that Donald Trump’s tax plan would be simpler than the current code and that it would help the wealthy, while increasing the national debt. As you might expect, Hillary Clinton’s proposals would be basically the opposite. Her tax plan is reportedly more complex and it’s expected to increase taxes on just about everyone, with the wealthiest taxpayers absorbing the brunt of the increase.

However, that being said, neither candidate has to stick to his or her proposed plans if elected. Additionally, the bigger question is how would these plans really affect the economy if they were implemented? The nation’s debt is rising and it will likely continue to raise no matter which candidate is elected. That means people and businesses, especially small ones, will be footing the bill.

According to the Tax Foundation, which typically opposes tax hikes on the wealthy, Clinton’s plan to increase taxes on investment and businesses would likely reduce the size of economy by about 2.6 percent over 10 years. Much of that would come from her desire to increase the estate tax. According to the Tax Foundation that increase would likely cause wealthy taxpayers to invest lest money and thus would hold down the entire economy. That, in turn, would force the average income in the country to go down.

On the other hand, those who believe tax increases on the wealthy are favorable to the economy claim that the Tax Foundation’s estimates are exaggerated and that the economy would not be significantly damaged by Clinton’s proposals.

You also might like the article Trump, Clinton and the Wealthy—What’s at Stake

https://www.washingtonpost.com/news/wonk/wp/2016/10/13/what-hillary-clintons-tax-plan-would-really-do-to-the-economy/
http://www.forbes.com/sites/garrettgunderson/2016/10/13/clinton-versus-trump-how-their-tax-plans-will-affect-you/#76f963cd3346

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Trump, Clinton and the Wealthy – What’s at Stake?

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The 2016 presidential election is finally winding down and in a few weeks we’ll know who our next president is going to be. This election cycle has been very heated and the two candidates have been very polarizing. While most people at least have a routing interest in wins the election, there are some groups of people that will be affected more than others, including high-net-worth individuals.

As they are with every election, taxes and the economy have been a hot topic during this year’s battle for the White House. While both candidates claim to have tax plans that will help Middle America and at the same time give the country’s economy a boost, they both have completely different ideas on how to accomplish those goals.

One of the subjects where their tax policies differ greatly is how to tax the nation’s wealthiest taxpayers. As you might guess, one candidate’s proposals would benefit the wealthy greatly, while the other candidate’s would go after high-net-worth individuals with a vengeance.

According tot the Tax Center Policy, Donald Trump wants to cut taxes by more than $6 trillion, while Hilary Clinton wants to spike them by $1.4 trillion. Under Clinton’s plan, the top 1 percent would be paying most of that increase, with an average tax hike of $118,000. Under trump’s plan, the top earners would see an average tax savings of about $215,000.

On the business side of things, Clinton’s plan calls for an increase of $130 billion in business taxes, while Trump wants to cut them by more than $2.6 billion. The Tax Policy Center also notes that Trump wants to simplify the tax code, whereas Clinton would make it even more complex than it is now.

As for the candidates, they have different views of the report, with Clinton’s campaign claiming it’s further evidence that she wants the wealthy to pay their fair share, while Trump’s campaign calls the study “fraudulent.” For more on the tax Policy Center’s assessment of the two candidates’ plans click here.

You also might like the blog: Trump vs. Clinton and the Tax Plans we Could End Up With

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Believe it or Not, Clinton, Trump Do Agree on Something

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Are you ready for the election to be over? While all presidential elections seem to bring out some of the worst in people, this one appears to have reached new levels of animosity and contention, which is constantly on display in the media. It’s no secret that Donald Trump and Hillary Clinton do not like each other. In fact, it would seem that they don’t see eye-to-eye on any major, or even minor issues.

However, despite all the heated debate and the constant bickering that has headlined this election, believe it or not, the two candidates do actually agree on at least one thing. Both candidates reportedly feel that hedge fund managers should be paying higher taxes.

During the second national debate both candidates agreed that the carried interest tax loophole should be eliminated. Carried interest is the amount that hedge fund managers receive when their clients earn a profit on investment returns. Thanks to this loophole, hedge fund managers only pay 23.8 percent on this income instead of 39.6 percent.

This loophole has benefited many of the nation’s wealthiest households for years, but even some of its beneficiaries feel it should be repealed. So despite the rancor between the two presidential candidates, they will have the carried interest tax loophole in common. At least they can agree on that.

You also might like the article: Trump vs. Clinton and the Tax Plans We Could End Up With

 

http://qz.com/805418/hillary-clinton-and-donald-trump-agree-on-one-thing-hedge-fund-managers-should-pay-more-taxes/

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Best and Worst States for Taxes for Startup Companies

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Startup companies face many forms of opposition as they set out to change theworld, or at least carve out their own niche – even though they are typically workingto provide solutions. That doesn’t mean that people or other businesses opposethem, necessarily, but rather there are so many difficult things they have toovercome and fight through to become successful; not the least of which is theirtaxes.

When it comes to taxes and startup companies, location does matter. According to arecent study from CRN, your efforts to provide solutions for change will bechallenged more by higher taxes depending on where you live. According to thestudy, the ten best places for Millennials to start a business when it comes to taxesare as follows: Mississippi, Nebraska, Missouri, Arizona, New Mexico, Indiana,Delaware, Ohio, Oklahoma and Florida.

On the other end of the spectrum, if you want to change the world with your startupcompany then you might want to avoid these 10 states, which were rated the worstfor startup companies when it comes to taxes: Idaho, New Jersey, Illinois, Maine,New Hampshire, Kentucky, Arkansas, Massachusetts, Pennsylvania and the worstbeing Rhode Island.

So, if you want to start a company to help solve a problem, you might first want toconsider relocating to one of the top 10 states on this list, especially if you live in oneof the bottom ten.

http://www.crn.com/slide-shows/channel-programs/300082410/2016-best-and-worst-states-for-taxes-for-solution-provider-startups.htm?itc=ticker

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Inboard- Disrupting Urban Transportation

I recently met with Ryan Evans, CEO and Co-Founder of Inboard Technology. What he and his business partner have been able to accomplish with Inboard, in a relatively short period of time is amazing! From creating the first electric skateboard with motorized wheels to raising over $400,000 on Kickstarter, Inboard has definitely been able to gain a following and piqued the interest of not only skaters, but commuters and those living in urban environments. Inboard plans on shipping their first product the M1 globally starting in January of 2017. Above is a sneak peek video of my interview with Ryan Evans, to see the full interview click here.

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