Because There Can Be More To The Good Life, A Higher Level, A More Abundant Life -
From Mere Wealth To Prosperity
Wealth preserving economic insights make living the best of the good life prudent wealth management
"Our darkest days are ahead of us... not behind us.”
President Joseph Biden
"A lot of paid tax preparers are in the dark. There’s no point in paying somebody to do your taxes if those folks don’t do you any good.”
Charles Grassley U. S. Senator
The people who were sitting in the darkness saw a great light, And those who were sitting on the land and in the shadow of death, upon them a light dawned." Matthew 4:16
Want to lighten your tax burden? With YES Your Expected Savings can be more than 50% less tax.
The Tax Cuts and Jobs Act of 2017 (TCJA) was the beginning of some of the most sweeping reform of the tax code in a generation. And yet most tax payers, many tax professionals, and even the IRS remain largely - in the dark.
For example, did you know that in 2020, a provision enabled anyone - regardless of amount or type of income - to pay no federal income tax? $100 million in ordinary, passive, or capital gains, could have been tax free!
Few tax professionals were aware and even fewer discussed it with their clients. If your tax advisor did not talk to you about it, is it possible they may be overlooking other beneficial tax code provisions?
Biden not only promises to roll back the TCJA, the Democrats plan substantial new taxes and increased rates.
The rules will change. The sands will shift. It won't be smooth sailing for everyone. There will be higher tax rates, and expect most of the previously allowed and encouraged deductions to be substantially reduced, restricted or repealed entirely.
Not to mention greater enforcement with more IRS audits.
As a result, most of the best tax plans that kept the effective top rates around 26 - 28% for those with AGI over $500k are now dashed wrecks on the rocks - or at least taking on water and sinking fast.
These are relatively uncharted economic waters, replete with stormy seas, as well as expected challenges, and unforeseen obstacles to navigate.
There will be winners and losers. Some will pay more tax, some less. But almost all will pay too much.
How much tax will you pay? With YES, most can lighten their tax burden by more than 50%. Will you?
Top tax rates now range from 30 - 37.5% and are expected to approach 40%. That's for capital gains too!
Even if Biden does as planned, with YES, you can expect effective maximum rates of only 9.6 – 19%.
Or as one astute Florida CPAs succinctly put it, "This is a game changer for your clients.”
But, can YES lower your taxes by 50%?
See for yourself. Or view some typical examples of Your Expected Savings with YES on your team.
Using the most conservative worst case scenarios, the generic chart compares what a range of hypothetical tax payers could expect to pay - both in tax rates and dollar expenditures. Under the current status quo without YES - versus the maximum taxes they could expect to pay with YES.
In fact, the actual savings and benefits could - and should- be substantially greater with the appropriate planning tailored to the individual tax payer; their situation, goals and resources.
Federal Tax Estimate: Single, No dependents, W2 ordinary income as only source of Adjusted Gross Income (AGI)
In order to keep things simple for educational purposes only, assume highly compensated W2 employees such as professional athletes, physicians, corporate executives, entertainers, entrepreneurs, etc.
All tax payers are single, with no dependents and Adjusted Gross Income (AGI) is only W2 employee ordinary salary income ranging from $500,000 to $10,000,000.
But this is just the start.
This is easy low hanging fruit. There is simply no longer any reason to pay more than 20% in federal taxes – even as a highly compensated W2 employee - unless you wish to or don't know any better.
In fact, effective tax rates can be reduced further depending on the tax payer, their goals and situation.
For example, recently we were asked if there was anything else for someone with an AGI of $750,000.
There could be a plethora of strategies depending on the exact specifications of each tax payer's situation. However not all of the potential options would be appropriate for everyone. That is why it is imperative to work closely with each tax payer's tax advisor.
Just knowing the AGI of $750,000 is not really enough to speak intelligently. For example, is this is a 25-year-old single professional athlete, a 45-year-old divorced corporate executive or a 60-year-old married entrepreneur? Each would require different strategies.
Nevertheless, while the previous chart gives broad ranges and basic tax savings for various tax payers up to $10,000,000 in ordinary income, a bit of a deeper dive for this example could be instructive.
Assuming a married taxpayer filing jointly with no dependents and with $750,000 of AGI of only salary income- if he does nothing- could owe about $212,000 in federal taxes.
However, by combining several of the most frequently overlooked tax code provisions along with our basic strategies, it would be relatively easy to reduce his federal tax liability on ordinary income of $750,000 to a range of between $13,000 – $19,000.
Simply put - a tax savings of about a $200,000 is possible in just the first year alone.
As our CPA friend might say - $20,000 tax on $750,000 of income: those kinds of numbers are a win & can be quite a game changer regardless the game you're playing, league you're in, or team you're on.
At this point, you may have some questions.
If you're like most people, you probably already have a pretty good idea what you would do with the additional money if you could reduce your taxes by 50%. That's essentially just found money, almost like winning the lottery.
But again, if you're like most people, you're probably asking yourself:
1) "How much can YES really save ME on MY taxes?
2) "How can YES and their affiliated tax processionals legitimately provide tax savings of 50% and more?
3) How can YES provide such tax savings when my CPA, tax attorneys, wealth managers and financial advisors can't?"
Because surely, if your current tax, legal, financial advisors and wealth managers knew how you could reduce your taxes by half, possibly saving you millions of dollars, they would have told you by now - wouldn't they?
If these questions have not yet crossed your mind, they probably will sooner or later. The sooner we start, the more flexibility you will have to ensure your maximum success.
1) How much can YES really save ME on MY Taxes?
At this point, the best answer is - it depends - and largely on you.
The actual federal tax liability of any particular U S tax payer is highly dependent upon each individual tax payer, their unique circumstances and specific situation and can vary significantly from one year to the next for a myriad of factors some under the tax payer's control and some beyond their control such as general economic conditions, new tax laws, new IRS regulations, and revised court interpretations of existing IRS regulations.
Then there may also be a question of the terminology - such as tax, accounting, or economic.
For example, assume a tax payer is able to reduce their taxes by $1,000,000 this year. He then invests that $1,000,000 for 5 years at an Internal Rate of Return (IRR) of only 10% so that at the end of 5 years it would be about $1.6 million. Or if he is a business owner, perhaps he can generate a much higher return on his investment for a longer period - lets say 20% for 10 years - then his initial tax savings would be worth about $6.2 million.
So how much did this tax payer actually save?
As a result of these new tax strategies that reduced his taxes, how much did his net worth increase or would be available to his heirs? Is it only $1,000,000 or is it $1,600,000 or maybe $6,200,000?
Then you have to keep in mind that this is probably not a single year tax savings but a multi-year program. So lets say our tax payer is now able to reduce his taxes by $1,000,000 each year for 10 years and is able to invest the tax savings at 20% for 10 years.
Did this tax payer save only $1,000,000 - just what he saved in the first year?
Or did he actually save - and increase his net worth - by $62,000,000 - by what he was able to save each year for 10 years and then accumulate by successfully investing those tax savings into more productive alternatives?
you're not sure you can do it,
“If somebody offers you an amazing opportunity -
Sir Richard Branson
say yes – then learn how to
do it later!”
Admittedly, these are very rough calculations designed for general conceptual discussion. But they are sufficient to demonstrate that the actual economic value of multi year tax savings when successfully invested over an extended period is significantly greater than just the initial tax savings the first year.
The concepts are just as valid whether the first year tax savings are $100,000 or $100,000,000 - and with both future values and historical costs.
On a bit of a side note, but vitally important as discussed below, the historical aspects are frequently a cause of great consternation for many current tax advisors and can sometimes lead to misguided obstructionist behavior resulting from the current tax advisor's guilt and desire for self preservation.
Just as it is easy to extrapolate that the full economic consequences of just a single one year tax reduction of $1,000,000 could have a $62,000,000 impact upon a tax payers net worth - the historical extrapolation is seldom lost on the tax payer and his current tax advisors.
The uncomfortable "elephant in the room" that everyone is aware of yet seldom addresses with the current advisors is that while these overlooked strategies can now significantly help the tax payer - the fact they have been ignored or overlooked for as many as 20 years may have been just as detrimental to the tax payers net worth.
Again as we discuss below in greater detail under CPA Confessions, it takes a real professional to admit he overlooked, forgot, or was unaware of certain beneficial tax code provisions that could have significantly reduced the tax payer's tax liability over an extended period with the net impact to the client of potentially millions of dollars of loss.
But as we point out, no one knows everything. We certainly don't. And what you did know - changed!
That is especially true about the U. S. tax code - in general and as to all of the temporary provisions or incentives designed to stimulate specific industries or investments, or achieve some other special government social purpose.
No one can be an expert in all areas. That's why we specialize in only a few key areas. There will always be room for improvement. The tax code is simply too voluminous and volatile. In fact, that's why continuing professional education is required.
Unfortunately, CPA's are not generally considered to have a fiduciary duty to clients. Nevertheless, the best professional tax advisors are those that do not deny any possible imperfections and shortcomings but rather embrace the opportunity to learn something new and help their client recover from any oversights - even if that means putting their client's interest before their own and with the risk of potentially loosing a client.
What CPAs say is NOT always exactly what they really mean is the gist of a 1996 Patrick Rice article, "What to do when your CPA says, you can't do that".
The takeaway was that CPAs, like many professionals, often say things that can mean something different to a lay person resulting in very costly misunderstandings.
When a CPA, financial advisor, broker, etc. says, "You can't do that," whatever "that" investment or project is you are trying to do, what they really mean is: "You can't do that - here with me".
"I've never heard of that,
I don't know anything about that,
I don't know how to do that, or
I can't make any money if you do that."
Therefore, since I can't do that, then no one else can do that either.
So how much can you actually save in taxes in any one year?
As briefly mentioned previously, Just knowing someone's Adjusted Gross Income of $750,000 is not enough information to speak intelligently about potential tax liability for any single period or tax planning options for subsequent years. A 25-year-old single professional athlete, a 45-year-old divorced corporate executive or a 60-year-old married entrepreneur would probably have different tax liabilities, investment goals, and personal priorities that would require different tax solutions.
However, that is not to suggest there may not be some substantial overlap of strategies and tax plans.
There are many ubiquitous conditions consistent with various segments of the tax paying population - Including but not limited to:
1) The IRS reports that of those earning over $200,000, less than ½ of 1% take full advantage of all the available tax code provisions.
2) The higher your income, the more likely you are to over pay your taxes by overlooking such beneficial provisions.
3) That on average, the greater the income generated, the more likely one is to over pay their taxes up to a point that is almost twice what they should have been required to pay had they fully exploited the available tax provisions.
While the evidence, statistics, and observations may suggest a generic universal norm, such as an average expected tax savings of 50%, it's always possible any single taxpayer could be an outlier.
At this stage of the process, without additional personal information, it's impossible to estimate with any specificity or reliable degree of certainty what any individual's tax liability for any given year may be or their possible tax savings.
Therefore, while we can be confident that the vast majority of tax payers consistently and significantly over pay their taxes each year by as much as 50% or more because they fail to take advantage of available tax benefits, we can't be certain about any individual tax payer without specific tax payer information.
In order to properly detect the amount any specific tax payer may be over paying their taxes, identify other areas of additional savings, and then determine the most appropriate strategies for any individual tax payer, requires the exchange of some minimal specific information as to the tax payer's situation, priorities, objectives, and resources.
Thus, a simple call or email - could and should be - sufficient to at least initiate the evaluation process that should result in tax savings of up to 50% for most tax payers.
The other frequently asked questions are probably best answered jointly.
2) How can YES and their affiliated tax processionals legitimately provide tax savings of 50% and more, and
3) How can YES provide such tax savings when my CPA, tax attorneys, wealth managers and financial advisors can't?"
At the risk of over simplification:
We are not like other advisors.
Too many other advisors while they may attempt to specialize with varying degrees of limited success, most are still required by professional obligations to be more of a jack of all trades and a master of none. They are required to have a broad general understanding of many concepts and issues which at least in theory would allow them to serve a greater number of the public at large. Thus, as a result of an ever changing tax code, it is inevitable that many of the more obscure, specialized or seldom utilized provisions will be forgotten or overlooked by most tax professionals.
Fortunately, as consulting managerial economists, we are a more select group and don't have such professional limitations or competitive pressures as CPAs, attorneys, financial planners or asset managers. There are not hundreds of thousands of us clawing for clients. We don't try to be "all things to all people" and can be very selective as to our clientele. As such we are social scientists trained in the scientific methods and are specialist with specialized knowledge, proprietary economic insights to provide information advantages, unique skills and perspectives but without most of the constraints and limitations of many other advisors.
The higher your income, the more likely you are to over pay your taxes. Primarily because with a more sophisticated and complex financial situation, there is more to overlook or fall through the cracks - especially given the lack of specialized expertise and the faliure by most to ever get a second opinion on their tax returns. It makes for a perfect storm. For example, the IRS reports that of those earning over $200,000, less than ½ of 1% take full advantage of all the available tax code provisions.
Too many tax professionals are in the dark on tax issues
As more thoroughly explained in Taxes, Yachts, & Wealth Preservation, most High Net Worth Individuals consistently, substantially, and needlessly over pay their taxes because too many tax professionals are in the dark on many tax code provisions that could reduce their clients' taxes.
That's the federal government's conclusion.
Most tax professionals simply don't have the specialized knowledge or the time to become an expert on everything tax related - and then everything else business and investment related that most clients expect them to know. There is just too much regulation, changing too frequently and too little time, for any advisor to be an expert on all things that could possibly relate to every client.
The reality is the way the system seems to work more often than not, is that no one really seems to know what they are missing - or overpaying in taxes. A bit like the blind leading the blind.
After all, seldom do individual tax payers opinion shop or seek second opinions on their personal taxes.
Since neither clients nor the advisors really know any better, most tax advisors seem to be able to get their clients "close enough" to where the client would hope to be. But the reality is precious few can fully deliver.
Thus, to better understand how YES can help reduce taxes when other advisors can't, perhaps it might be helpful to think of your current CPA or tax advisor as a ship's captain.
With YES functioning as a harbor or marine pilot.
Each has special knowledge and unique expertise which the other does not possess and can probably never be as proficient. The CPA and captain have broad general knowledge, while YES and marine pilots have very specific, unique and detailed expertise for the immediate project at hand.
"Ship captains are usually knowledgeable about their ship and ocean navigation, but they do not have the local knowledge, and the ship-handling training and experience for restricted waters, narrow channels, shallow waters, and in most cases, docking and undocking maneuvers, that pilots possess. Even ship captains who call regularly at the same port, never come close to matching the level of experience and local knowledge of the local pilots serving the port." Source: Canaveral Pilots
'Ship captains control sea-going vessels, from cruise ships to barges to ferries to freighters. The captain is master of his ship, managing its crew as well as its course and speed.
A marine pilot, on the other hand, controls ships when they’re in crowded harbors or other confined waters. While the captain knows his ship well, the pilot is the expert on his particular waterway. Source: Big Future
We have your back.
As economic consultants, we don't replace or compete with your current CPA, legal or financial advisors, but are essential supplements thereto. We provide specialized expertise and a competitive information advantage that complements and enhances the productivity of everyone's current as well as future efforts. Our contributions help ensure maximum efficiency and prosperity - with a special emphasis for those opportunities that might otherwise fall through the cracks or be overlooked.
In fact, the best and the brightest tax advisors and wealth managers welcome our addition to the team. They recognize our unique skills can relieve some of their burdens, making their jobs easier, more productive and efficient, thereby enabling them to provide better service and greater value to even more of their clients.
Another set of eyes with a different perspective helps everyone.
Unfortunately, at least initially, it's not uncommon for some CPA's, attorneys, financial planners, and asset managers to be a little cautious and reluctant to enthusiastically embrace what they may perceive as a potential competitor.
First, unless they have worked extensively with the largest global entities they probably have little experience with the unique skills, insights, and contributions of managerial economics.
Second, the current advisor is being confronted with new information suggesting they may have overlooked valuable tax or investment benefits that have cost their client hundreds of thousands or even millions of dollars in the past and will continue to do so going forward unless a different course of action is implemented.
I proffer this is usually new information to the current tax advisors because if it was information they were familiar with, they would have already presented it to their client. In addition to the frequent exclamation by current tax advisors, "I didn't know you could do that."
Then once they are presented with irrefutable evidence of this new information and how valuable it is to their client, sometimes requiring the participation of one of our CPA or advisor affiliates that also specialize in this particular strategy, the current tax or financial advisor may be professionally embarrassed or even feel threatened they may loose a client to us or one of our affiliates.
Consequently, while most current CPA's eventually come around, can be sufficiently educated or simply agree to defer to our and our affiliates' specialized knowledge and expertise, many of the initial concerns by some current advisors, and especially CPA's are completely understandable.
CONGRESSIONAL CONCERNS ABOUT TAX PROFESSIONALS
Congress estimates that well over half of all taxpayers overpay their taxes by not taking advantage of available tax provisions. Especially disturbing is that over 89% of the taxpayers that overpay their taxes use “professional” tax preparers: CPA’s and accountants.
U.S. Senator Charles Grassley, current Chairman of the Judiciary Committee, and former Chairman of the Committee on Finance, expressed his concern that thousands of taxpayers overpay their taxes because they and their advisers are unaware of tax benefits Congress enacted to help them.
“I’m very concerned that tens of thousands of taxpayers aren’t taking advantage of the available tax provisions. Even worse, a lot of paid tax preparers were in the dark. There’s no point in paying somebody to do your taxes if those folks don’t do you any good.” (Emphasis Added)
The report stated tax professionals didn’t know about key changes in the tax code, didn’t see how clients would benefit, or blamed preparation software for their error there would be no benefit.
Most professional advisors place great value on their client relationships. They take great care not to jeopardize their position with their clients.
Nevertheless, it is just human nature that when presented with something new and innovative or something they may have overlooked that might help their client, but could also potentially run counter to their own self-interest, many advisors and CPAs would not "rock the boat" so to speak and simply default to the status quo - even if it may not be in the best interest of the client.
More than one CPA has admitted they never recommend any new idea or strategy that could help their client - no matter how good it may be for their client- if the idea or strategy was initially suggested or introduced by someone else.
As they explain it:
"Recommending a third party's new investment or tax strategy is a no win proposition for me.
If I admit the value of the new strategy as a good idea and recommend it, and it is successful, the third party gets all the credit.
However, my client may start to wonder about my abilities and why I didn't think about it and suggest it before this other third party. My client may start to calculate how much money he could have saved over the years if I had suggested this new strategy to him sooner - and how much those savings could have compounded to over the years of not implementing this "new" strategy.
Then my client may start to believe that I may have cost him hundreds of thousands or even millions of dollars.
My client may also start to wonder what else I may be missing or overlooking.
I stand a very good chance of losing an existing client by recommending any strategy or opportunity offered or introduced by someone else - even when that strategy turns out to be successful, profitable and performs exactly as expected and was very beneficial for my client.
On the other hand, if I go along, allow or recommend a strategy or opportunity offered by some third party, and the opportunity fails to meet expectations or has any other problems - for whatever reason, I get the blame for allowing the client to participate.
The client wonders about my competence.
For me, there is nothing good that can come from it, and I loose either way. Thus I always advise all my clients against all ideas, strategies and opportunities that I don't present first or that are presented to my clients from some third party. No matter how good it might be for my client."
NOT ONE CPA WAS CORRECT
This point was recently emphasized again by the current Chairman of the House Ways and Means Committee. U. S. Congressman Kevin Brady's citation of the policy paper number 130 by David Keating the senior counselor of the National Taxpayers Union, and particularly the section "Experts Agree They Can’t Agree on Tax Bills".
In a hypothetical tax case for a simple family of four, all participating tax professionals got a different answer, and none got it right. The professional who directed the test admitted “that his computation is not the only possible correct answer” since the tax law is so murky. The tax computed by these tax professionals ranged from $34,240 to $68,912.
Not one of the CPAs got it right. For just a simple family tax return, the subject tax liability varied by a range of more than 100%. (It makes one wonder about the variance in complex tax returns.)
BUT DON'T THINK IT'S JUST CPA's
Likewise a similar study of more than 1,000 charitable giving professional advisors including CPAs, attorneys, financial planners, wealth advisors and asset managers found a similar result. The study consisted of randomly selected questions posed by a group of professional charitable giving experts.
Consequently the study found that when asking these “professional advisors” about their specific area of expertise – charitable giving- that no group answered more than 70% correct. On average per group, CPA’s answered only 30% correctly, financial advisors 45%, and attorneys 65%.
To quote one of the researchers, “Most financial experts are not up to speed when it comes to the mechanics of charitable giving, even though that’s what their wealthy clients want. These are the people who are supposed to know this stuff, and they didn’t.”
These studies suggest the situation has not improved in recent years but probably worsened.
That is most certainly true now, after the most sweeping change to the tax code in a generation, the Tax Cuts and Jobs Act of 2017. There is no reason to think the situation has improved.
The tax code has only become more confusing with greater uncertainty.
You can no longer do many of the same things, the same way, and expect the same tax benefits. In fact, many of the long established tax plans and strategies are no longer available at all, or their effective value has been substantially diminished.
NOW YOU CAN STOP OVER PAYING YOUR TAXES
Because of the recent sea change in the U S tax code, The Tax Cuts And Jobs Act (TCJA), many tax payers are recognizing the inevitable need to reconsider their tax plans and wealth management strategies. Yet, to see meaningful change come to fruition, requires a prior “sea change” in thinking - a radical change in expectations and from the so called “conventional wisdom".
YES, Yacht Executive Solutions, is now doubling down on its efforts as an advocate for the affluent. With the assistance of other like minded professionals - YES now offers their services and strategies so even more High Net Worth Individuals can successfully navigate the most extensive tax overhaul in 30 years.
Fortunately, the TCJA should have little if any adverse effect on YES clients. And some will benefit substantially.
Sure, under TCJA many prior tax code provisions have been modified, limited or eliminated, but others have been added. So while the specific strategies employed may need to change, we should still be able to provide most clients and partners with significant tax savings.
As much as some may try,
no one can be an expert on everything.
Over the years we have found two constants:
The higher the income, the more one tends to consistently over pay their taxes, and
We can usually find items that have been consistently ignored or overlooked for years by some of the the best CPAs and other advisors for that can reduce the annual taxes of high income earners between 30 - 50%.
Understandably, at first impression, many may be surprised by those figures assuming that more affluent tax payers would have better outcomes since they can easily afford and they usually paid for the "best" tax advice and counsel. And in some respects that is true.
But nobody knows everything. As the tax code becomes increasingly more complicated, enforcement seems more arbitrary and interpretation less predictable.
Could your current advisors be missing something? Could another set of eyes help?
Many will not be surprised to learn they have significantly over paid their taxes for years. They have "sort of been wondering about their current tax advisors" for some time feeling they may have "outgrown" them but chose to remain out of a sense of misplaced loyalty.
Professional tax, legal, financial advisors and wealth managers have a difficult if not impossible challenge keeping abreast of all the tax and regulatory changes of their practice specialty – much less find the time and resources to focus on the potential effects of only a sub-set of their clientele with unique interests.
For example, it is the very rare advisor that makes his clients' hobbies and lifestyle interest a priority - much less with the time, resources, and ability to proactively seek out and design strategies that may have little value to other clients or other industries.
Understandably your advisors must prioritize their limited resources to address the needs of the majority of their clients.
Not surprisingly, some of the lesser known, newer, or more specialized benefits and strategies may from time to time be overlooked until brought to the specific attention of your regular CPA, attorney, or financial advisor.
Unfortunately, too many affluent tax payers just assume there is not that much difference between qualified tax professionals, or that if they pay a high price for advice to a recognized name that the tax advice must be "good".
Does "Son of Boss" ring any bells?
Many affluent tax payers simply don't know how to check the quality of their current tax advice and seldom get second opinions - from those that are qualified and independent to even have an educated opinion. They become comfortably complacent. That can be a costly mistake.
As documented previously, tax advice from CPAs can vary as much as 100% or more - even for relatively unsophisticated returns.
As tax specialists, we are able to focus on only a select few areas and on the needs of a select clientele. Our uniquely targeted expertise and perspective; enables us to provide unsurpassed insights to help our clients and partners achieve their tax and wealth management objectives.
That if your current advisors knew, surely they'd have told you already- wouldn't they?