What Happens to the Wealthy if Latest Estate Tax Proposals Pass?


If you haven’t heard by now, there is a chance that wealthy business owners could be taking a big hit thanks to a proposal announced last month by the U.S. Treasury Department. We discussed this proposal in a previous blog: “Is Obama Secretly Trying to Raise the Death Tax Again?

According to the Treasury’s proposal, the practice of so-called valuation discounts would be slowed or even eliminated in certain situations. These discounts allowed for the transfer of a wealthy business, in part or its entirety, from a parent to a child, for example, to be done at a much lower tax rate. This new proposal would basically negate that discount on transferred business stakes. So what does that mean for wealthy business owners?

This proposal is squarely aimed at high net worth individuals and families that own a family business. With the change the value of a transfer of part or all of a business would no longer receive the valuation discount, which means the recipient would have to pay the full estate tax incurred. If you own a wealthy family business then now is probably a good time to meet with your wealth advisor, accountant or estate planner to make sure your estate plan is in proper order. Click here to contact GROCO for more info.

At the same time, for now this is still just a proposal and there will be a public hearing on the matter on Dec. 1. Additionally, there is a chance that this could all change again after the presidential election, as both candidates have strong opinions on the current estate tax. Stay tuned.


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Trump vs. Clinton and the Tax Plans We Could End Up With


If someone asked you to explain the differences between the two presidential candidates’ tax plans would you be able give a clear explanation? If you answered “no” most likely you aren’t alone. It’s not uncommon during a presidential election for most voters to be confused at what the candidates are actually promising or proposing. With so much back-and-forth rhetoric, it’s hard to know what each candidate really has in store.

According to Donald Trump, he wants to reduce taxes for everyone in America, especially middle-income Americans. According to numerous reports, Mr. Trump’s plan would reduce the tax system to just three tax brackets, with the top rate dropping from its current mark of 39.6 percent down to 33 percent. He also said that the wealthy would still pay their fair share, but not so much that it hinders the country’s ability to compete.

On the other hand, Hilary Clinton has yet to describe in detail what her tax plans for the middle class would be, or how they would be affected. However, she has made it clear that she wants to raise taxes on the ultra wealthy. Mrs. Clinton has stated that she wants anyone who makes more than a million dollars a year to pay a minimum of 30 percent, whether it’s from income or from capital gains. She would also like anyone who makes more than $5 million to pay an extra 4 percent.

Under Mrs. Clinton’s plan the top 1 percent would end up paying three-fourth’s of the additional taxes being collected, whereas under Mr. Trump’s plan the wealthy would be getting a tax cut of about 5.3 percent. Meantime, both candidates reportedly agree on eliminating the carried interest loophole that offers hedge fund managers a heavily discounted tax rate. Lastly, Mr. Trump wants to eliminate the estate tax completely, while Mrs. Clinton wants to raise it, as well as lower the threshold at which it starts to apply.


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California Voters Appear to Favor Higher Taxes for the Wealthy


It’s no secret that California has one of the highest tax rates in the country, especially when it comes to the wealthiest taxpayers. So it wasn’t much of a surprise when back in 2012 residents voted in favor of Prop. 30, which installed a temporary income tax hike on the wealthy. Now fast-forward to 2016 and that proposition is set to expire.

However, those affected by the tax may not being seeing tax any relief anytime soon. That’s because this year’s ballot includes a new proposition that aims to keep those increases in place. Proposition 55, which would extend the temporary income taxes for all those who make more than $250,000 annually, reportedly has the backing of a majority of the state’s voters.

According to a recent survey amongst more than 3,000 registered California voters, 65.3 percent of the participants said they are in favor of extending the tax hikes. Seventy-eight percent of democrats supports the proposition, while only 46 percent of republicans support it.

The study also found that in general most voters felt that their current level of taxation was too high, with republicans outnumbering democrats in that category 73 percent to 50 percent. Time will tell how this turns out, but if these numbers are an accurate indication then it looks like come November California’s wealthiest residents won’t have much to celebrate when it comes to taxes.

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Which Taxes Do Taxpayers Hate the Most?


How many different taxes can you think of? Chances are there are too many for the average person to count. While not all taxes are the same, for the most part people don’t enjoy handing over their money to the government for any reason. So, of all the taxes you have to pay, which ones do you hate the most? Since not all taxpayers have to pay the same taxes, the answers will obviously depend on your income level and which taxes you’re subject to.

However, there are certain taxes that would be on almost every taxpayer’s list. In fact, there few taxes that have received as much ire as those associated with Obamacare. While we can’t say for certain, these three taxes related to the president’s Affordable healthcare Act are all likely to receive a lot of votes for the most hated taxes.

The first one can affect just about anyone. It’s the penalty for those who don’t have health insurance. While the amount will vary depending on your income and how many uninsured individuals you have in the home, this penalty can be a burden to many taxpayers. Another unfavorable tax associated with Obamacare is the penalty tax on employers that pay for their employees’ health insurance.

Lastly, and this one is very common among wealthy individuals, is the Medicare surtax on net investment income. This 3.8 percent surtax is in addition to the 39.6 percent income tax rate for those in the highest tax bracket. It’s also added onto the 20 percent capital gains tax rate. Many high-net-worth individuals get hit with this tax, even though the actual tax has nothing to do with healthcare.


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Federal Tax Collection Up, Along With Federal Debt


Which presidential candidate has the better tax plan? When will Donald Trump, if ever, release his tax returns? How would Hilary Clinton’s plan for corporate taxes and the estate tax affect the business world and the wealthy? The questions go on and on. It’s tough to always get straight answers as the candidates and their staffers typically look to spin their comments in such a way to stay as neutral as possible so as to not lose any potentially undecided voters.

Meanwhile, at a time when taxes continue to be a hot topic as the presidential election nears it’s final weeks, the U.S. Treasury recently released some new data regarding tax collection over the life of the current president. According to the Treasury’s monthly statement, over the 91 months that President Obama has been in office he has now collected over $20 trillion in federal taxes.

That is a staggering figure. In addition, during that same time the federal deficit has increased from $10.6 trillion in February 2009 to it’s current amount of $19.5 trillion. So on average, how much does that mean for each taxpayer? According to the Bureau of Labor Statistics, 151.6 million people were listed as employed in the month of July in the U.S. Given the amount of money collected in taxes over the president’s time in office, the average amount each worker would’ve paid is approximately $133,216.

So while it remains to be seen how the next president will handle taxes, it’s fair to say that taxpayers, especially the wealthy, have paid an enormous tax bill during the current president’s tenure.


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Learning to Innovate


Despite popular belief, learning to innovate and ideation can be taught in a systematic way. Just as easily, business ideas can be vetted in a systematic way. Rob Ryan took his career into orbit when we discovered a business development model which he calls the sunflower model. He built his company- Ascend Communications- using the sunflower model and helped take it from the point of bankruptcy to selling for $24 billion. Today, Rob has his eyes fixed on the up and coming generation by teaching high school students skills in entrepreneurship.

Rob helps people understand their core competency- or what they’re really good at. Once they see the strengths that they have, they can learn how to leverage them and vet out ideas that can turn into profitable businesses.

The 5 main steps that Rob teaches students are:

  • How to identify your strengths?
  • How to rank those strengths?
  • How to ideate (create ideas) off of those strengths?
  • How to systematically rank those ideas to see where your competencies will take you?
  • How to go out to customers to validate this whole process (test your hypothesis)?

What is all comes down to is that Rob is trying to let everyone know that they can be successful by learning to be creative. He says that these skills aren’t just limited to Steve Jobs and Elon Musk- they’re in each and everyone of us and just need to be developed and brought out.

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The Inspiration Behind the One Minute Manager

“As John Lennon said, “Life is what happens to you while you’re busy making other plans” I met Spencer Johnson at a cocktail party in San Diego- he was a children’s book writer. I don’t know if you remember the the value tale series, the value of honesty, the story of Abe Lincoln. My wife met him first and hand carried him over and said ‘you guys ought to write a children’s book for managers, they won’t read anything else.’ Spencer was working on a mother’s on scolding book with a psychiatrist, and I invited him to a seminar. He stood in the back and he laughed and ran up and said, ‘forget the parenting book, let’s do the One Minute Manager.’ Since he was a children’s book writer and I was a story teller we decided to do a parable. It came out on Labour Day in 1982- next week in was on the New York Times’ best seller’s list because we were on the today’s show. It never left the list for 2-3 years. Now that it’s 30 years later it’s still on the best seller’s list. That really launched my career of writing parables. 


“This other book, (Fit at Last), has been fun. I’ve worked with Berret Kholer on a number of books, two with Mark Miller, who was the head of training for Chick-fil-a, one called, The Secret, What Do Great Leaders Think and Do. And we wrote a follow up book called, Great Leaders Grow, because if you stop learning, you might as well lie down and let them put the dirt on you. 


“I’m always looking for ways to communicate with people, in a way that can make a difference in their lives. When I work on these kind of things, it helps me too. So it’s not just about me saying I’m going to help al you idiots out there, overtime I work on a book, it helps me get down the road a little bit myself” -Ken Blanchard       

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AutonomouStuff Car Demo

Recently sent my American Dream’s production manager Andrew out to get a short interview along with a car demo from Wolfgang Juchmann, director of sales & business development at AutonomouStuff, a leading company in the autonomous cars industry.

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Trump Still Not Giving in to Demands Calling for Tax Returns


So what do you think about Donald Trump and his tax returns? This has been the subject of much scrutiny since Mr. Trump announced he was running for president and eventually becoming the republican nominee. Whether you love him or hate him, it appears that most people, even republicans feel that he should release his tax returns for the public to see.

His reasons for not doing so have ranged from he can’t because he’s being audited to people really don’t care about his taxes. More recently, his son, Donald Jr., said disclosing his father’s finances would only serve to cause political problems, “because he’s got a 12,000-page tax return that would create financial auditors out of every person in the country asking questions that would distract from Trump’s main message.”

It seems that just about everyone has an opinion on the matter, including fellow billionaire, Mark Cuban. In fact, we recently shared some thoughts from the Dallas Mavericks’ owner in this blog space: click here to read more. Now it seems that Mr. Cuban, who has pledged his support for Hilary Clinton, has more to say about this subject matter. According to the outspoken entrepreneur, not releasing his tax returns is actually one of the smartest things Mr. Trump has done.

As Mr. Cuban sees it, by not making his tax returns public the republican nominee has been able to keep his returns at the forefront of the campaign, thus allowing him to avoid talking about issues that actually matter. So in other words, Mr. Cuban feels that Mr. Trump’s unreleased tax returns are serving as a very effective diversion. Meanwhile, at this point Mr. Trump still has not indicated exactly when, or if, he will release his returns.

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American Taxpayers Are All for Real Tax Reform


Taxes, taxes, taxes. One thing is for sure you can’t run and hide from them. While most Americans pay their taxes, some more begrudgingly than others, most taxpayers wish they could pay less. What’s more, most taxpayers would also love to see some real change in the tax system instead of the constant back-and-forth rhetoric that continuously takes place between political candidates and lawmakers.

In fact, according to a recent survey from WalletHub the majority of Americans really just want to see some true reform when it comes to the nation’s tax code. According to the survey more than 75 percent of those who participated felt that the current tax code was either complex or extremely complex. By way of comparison, only 5.5 percent said that the tax code is simple or very simple.

The findings also suggested that there was a correlation between the age of the respondents and how complex they feel the tax code is. Specifically, the older the respondent the more complex he or she feels the tax code is. So what makes the tax code seem so complex? According to respondents one of the chief culprits is the amount of deductions available in the tax code. The majority of the participants preferred a tax code with fewer deductions.

There are many aspects to taxes and no doubt for the average taxpayer a much simpler code would be preferable. In any case, when it comes to high net worth taxpayers the tax code can be even more complicated. That’s why it’s a good idea to let GROCO take care of your taxes for you. Click here to contact us.

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