As a financial professional, I believe that an important element of my job is to help my clients think, and one of the best ways to help someone think is by asking questions. So oftentimes during client interviews I’ll ask that question, “What do you think is the single largest expense that you or I will ever have in our lives?”, and I’ve heard many responses – but rarely does someone mention the expense that I believe will be the highest in our lifetimes… Some people will say:
► Our home
► Children/college expense
► Health care expenses
All of these items are likely to have hefty price tags, but I think there is one item that trumps them all!
What about TAXES?!?
When you really stop and think about it, taxes will probably be our largest expense – you may have income taxes, sales taxes, property taxes, capital gains taxes, and estate taxes among a few.
And after we agree that taxes might actually be the biggest expense then I follow up with question #2:
“Do you think that taxes in the future will be higher or lower than they are today?”
Let’s see… why might taxes rise in the future?
► Social Security, Medicare, and Medicaid are on life support…
► In the US, we have about 10,000 Americans turning age 65 every day…
► Our country has an aging infrastructure – roads, sewers, airports, railroads all needing repairs and maintenance…
► And to top it off, as a nation, we owe somewhere near $20,000,000,000,000 to other nations!
And what is the one source of revenue that pays for all of these? TAXES!
Many people believe that taxes are high now. Actually, we are near historically low tax rates. According to the IRS website https://www.irs.gov/uac/soi-tax-stats-historical-table-23 , our current top marginal tax rate is 39.6%. For two years Post-World War II, the top marginal rate was actually 94%!
Almost universally, people agree that taxes are likely to be higher in the future, and furthermore one could consider that taxes now are actually “on sale.” So, if we must pay taxes, and if we assume they are probably going up, then it might be true that taxes today are on sale.
Then my last question completes this exercise – “If we agree that taxes are likely to be higher in the future and that taxes today are on sale, then… if you could pay taxes now and never again, do you think that you may like to do that with some of your money?”
There are a few ways that a person can pay taxes now and never again. Please give me a call to schedule your review.
Please note – I am not a licensed tax professional, nor am I giving tax advice. You should always consult with a licensed tax professional.