GET WHAT YOU GOT COMING!

     "Any one may so arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury.  There is not even a Patriotic duty to increase one's taxes." - Judge Learned Hand.
     Sounds quite relative to the current complaints that Donald Trump, Amazon and Google pay little to no taxes, does it not?  Warren Buffet only pays a 17% tax rate, and Donald Trump likely pays zero due to his enormous real estate depreciation, so why pay more than these cool guys?
     JAM VIEWS members spend their intellectual energy learning how to create wealth for themselves and others, recently began learning how to protect those assets from the bad people, and this week turn to taking the simple tax deductions which the U.S. Government has clearly laid out in the 5,800 pages of the tax code. It is your patriotic duty to follow their inducements to generate the type of investments which they want you to make.  Watch what I mean.
     It is simply irresponsible not to treat tax tracking and tax reduction as your second job, and hopefully soon your only job.  The great majority of Americans pay substantially more taxes than the code intends, and the Trasury Department gladly accepts all of this extra revenue.  Yet, a very small percentage of Americans do take full advantage of the code, and these are the people we end up working for, or wondering why they take so many fabulous trips, pre-tax.
     You do not have to make a lot of income and apply exotic tax structures.  You, today, must simply choose to educate yourself on what is available to you, as well as choose to spend your limited funds in the same manner as Warren and Donald. Today, order yourself a copy of Tom Wheelwright's book "Tax-Free Wealth," to review some of these simple strategies while the kids play in the pool this summer.  Then order the Tax Guide for Small Business, IRS Publication 334, on irs.gov, and you will have this clear, well-written guide within the week.  Next, start planning your exotic trip with your savings. Better yet, let me talk you into reinvesting at least half of these savings in order to increase your wealth building leverage and velocity.
     Once you get into the right mindset, you will understand how nearly everything you purchase and experience will be part of the tax-advantaged strategy, just like Warren. Warren doesn't eat a Whopper without his accountant deducting this expense.  Remember this the next time he claims that we all should raise the tax rates to "pay our fair share."  He doesn't care because he's not paying those same rates you will have to if you don't say to yourself, "WWWD?  What would Warren do?"
     I have been very fortunate to accumulate multiple businesses, properties and high-end assets, and contrary to public opinion, almost zero of these assets were purchased with my J-O-B salary.  These were fortunate results of starting corporate entities (see Post "Protect Your Future", 6/8/19), investing in tax-advantaged growth assets, and accessing cash and lending at tax-free or low tax rates.  This work is not rocket science. It is simply a choice to educate yourself and spend your time and energy on this instead of watching "American Idol" and "The Voice."  It is simply a choice.
     Let me give you a short list to get your brain juices (technical economic term) flowing:

1.  QuickBooks for the Self-Employed is $10 a month online.  Get it, learn it, devour it, love it.  Become the Quicken nerd. You will be shocked at how simple it really is, and your daughter will be impressed with your color graphs!

2.  If you don't have a side hobby which you can turn into a side hustle, get one.  Crafts, one rental property, sell old CD's on eBay, consult, sell R&F amazing cosmetics to your girlfriends, or best of all make your J-O-B your own company.  How many times do I have to harass you about this?

3.  Do your taxes yourself this year.  You again will be shocked at how simple it is, and you will likely discover what a lousy, vanilla job Joe-the-CPA was doing.  Once you get some momentum, wealth and cashflow going, you can interview tax advisors to select the right partner for your long-term mission.  First, though, you must understand.

4.  Your car, phone, computer, subscriptions and education should now be pre-tax expenses.

5.  All of your travel and most of your restaurant tabs should now be pre-tax expenses.  You will travel to industry conferences, to evaluate property acquisitions, to meet with potential partners or vendors, all pre-tax.  You will employ or give your spouse and children ownership in your LLC, and they will travel with you pre-tax.

6.  You will deduct your insurance, health care expenses, and even property taxes and certain sales taxes.

7.  You may choose to locate your office in the third bedroom currently housing the treadmill stacked with terrible Christmas sweaters, which you also haven't touched in years. Here you will pay rent to yourself or deduct a pro-rata share of the mortgage interest, property taxes, utilities and more.  You will periodically hold business meals in there, at which you will discuss business with your partner-spouse and deduct the meals.

8.  Make sure you add one piece of real estate into your plans, if not already.  The tremendous tax advantages and ability to use leverage (the bank's money) allow 4% a year growth (real state's historical rate) to be equal in comparison to a 30% a year growth in another investment asset.  Check my math.

9.  Have your LLC taxed as an S-Corp, pay yourself a reasonable salary (on which you pay the employment taxes), and then flow all the rest of the net income to you personally without paying payroll taxes on all the rest.  Google to get the details.

10. Bonus Class.  Give 20% of your startup LLC to your elderly mother.  You as Managing Member control the cash and tax allocations to Mom, or not (Let her take the cruise!).  Then 10 years from now when she moves onto her next adventure, the business is worth $10 million, you inherit the 20% now stepped up to a $2 million cost basis on which you will never have to pay capital gains when you sell.  Check it out.

     Now turn off "Wicked Tuna" and "Naked and Afraid," and spend this time implementing these simple tips.  Soon you will be bumping into Warren and Donald in some exotic locale, pre-tax of course.  Have a great week!

"It would be a hard government that should tax its people one-tenth part of their income."  -  Benjamin Franklin

** Great thanks to Tom Wheelwright, CPA, and the IRS :)  for their insight on many of the above details and strategy.

* For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

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UPDATES: LICENSING SCAMS, INEPT FED, CHARTER BATTLES, & CRONY CAPITALISM

     JAM VIEWS members know that we periodically revisit important topics 1) to ensure we all fully understand the dramatic impact of correct economics and business practices, and 2) to remind us that the fight for free markets and rugged individualism is a never-ending battle against the Looters.
     LICENSING.  Previously we learned that state, city, and county licensing requirements are merely scams to protect the entrenched business interests which are funding the politician's campaigns, and to generate revenue to support the ever-expanding government bureaucracy and entitlement programs on the backs of hardworking small business owners.  Recently, the state of Arizona has freed small business and individuals by passing a law to be the first state to recognize out-of-state occupational licenses, including more than 40 professions from cosmetologists and court reporters to psychologists and surgeons.
     Republican State Sen. Michelle Ugenti-Rita stated, "The reform opens up an appealing job option for low-skilled workers who otherwise would have had to pay between $8,000 and $15,000 for (re)-schooling to do the same work."  This leadership-by-example will have a dramatic impact across many states and release more capitalism than you may imagine.  Also, this is a huge benefit for military spouses whom uproot themselves and their professions to move with their transferred service member.  GOP State Rep. Jeff Weninger declared, "We are open for business, and we're trying to cut back on red tape here."  Congratulations to Arizona!
     STABLE DOLLAR.  Following up on our lessons explaining that the goal is not a strong dollar, nor a weak dollar, but a stable dollar, Judy Shelton, an economist and author of "Money Meltdown: Restoring Order to the Global Currency System," recently released some interesting statistics to support our case.  Judy's book explains that we should question the Federal Reserve's competency, as "no other government institution had more influence over the creation of money and credit in the lead-up to the devastating 2008 global meltdown."  Currently the Fed pays banks to keep their $1.5 trillion in excess reserves (8x what's required) in accounts earning interest instead of making loans to the public to create businesses and spur job creation.
     The Fed has always incorrectly believed that inflation results from job creation.  Judy points out that "inflation results when too much money is chasing too few goods.  It is not caused by real economic growth where wages increase to properly compensate people for their higher levels of output achieved through productivity gains."
     Also, as we keep preaching, the Bank of England's recent report concluded that today's "Fed-controlled" system has performed poorly in comparison to our periods under the gold standard (1870-1913) and the gold-exchange system (1948-1972).  Having the stable gold standard enabled "accelerating labor productivity, falling income inequality and increased workforce participation.  The Obama 2015 Economic Report of the President even suggested that if this same growth had continued once Nixon took us off the gold standard in 1973, that U.S. citizen's "incomes would have been 58% higher in 2013, and "the median household would have had an additional $30,000 in income."
     JAM VIEWS members know we must have a stable currency based on gold (or something else), and that the technocrats the Government keeps trying to tell us are brilliant, are not.
     CHARTER SCHOOLS.  This week we are reminded that bureaucracies and entrenched interests hate the upstarts which greatly outperform their mediocrity, especially in our children's schools.  Ben Chavis, a Lumbee Indian raised by sharecroppers in rural North Carolina and successful businessman-turned-educator, became principal of American Indian Public Charter School (AIPCS) in 2000.  This Oakland, California public school was then the poster-child for failed schools: truancy, drugs, violence, failing test scores, and all the rest.
     By 2004, after Chavis installed discipline, standards, and performance metrics, the middle school students achieved higher math and reading test scores than students at any other public school in Oakland.  After Chavis then opened a high school, this charter in 2008 ranked fourth in the entire state for performance.  To top it off, he also started a second charter middle school which ranked 5th out of 1,300 California schools, and in 2006 was named one of the top 250 schools in the country.
     So how did they reward him?  In 2011 Mr. Chavis announced plans to expand further, so the Oakland School Board began an investigation and found "financial improprieties."  Next, to great national media fanfare, the federal prosecutors indicted Mr. Chavis on mail fraud, money laundering, and conflicts of interest (see "Indicting a ham sandwich").  Thank God, last week the U.S. Attorneys Office in San Francisco dropped all of these charges for insufficient evidence, and Mr. Chavis agreed to a technical violation in order to move forward.  But, he had to leave AIPCS in 2013 to fight for his life for 5 years.  With class and grace this week, he stated, "I'm not the victim.  The kids are the victims."
     Remember to support school choice, support merit-based rewards, and to embrace others who succeed.  No schadenfreude!
     Finally, a quick note on CAPITALISM.  Ms. Chamlee-Wright, President of the Institute for Humane Studies at George Mason University, issued an article clarifying that our ultimate goal is not only to defeat all aspects of socialism, but also Crony Capitalism, the entrenched large-corporation, political-lobbyist, licensing-barriers-to-entry types of impure capitalism.  She also promotes questioning everyone and everything.  She stated, "I believe that competitive and open markets (plus lots of social and political freedom) are the answer.  Perhaps you think otherwise, but we should have that conversation rather than unthinkingly accept what's put in front of us."  She must be a JAM VIEWS reader!
     A reminder this week to do everything possible to support business startups and entrepreneurial mentality.  Stop at every lemonade stand, and always buy those water-logged golf balls from the kid peddling his inventory next to the pond on the 7th hole.  The Universe is watching.

"We must make the building of a free society once more an intellectual adventure, a deed of courage."  -  F.A. Hayek, Economist.

** Thank you very much to the WSJ, Forbes, and Fortune for the above quotations and statistics.

** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

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GROWTH & LOWER TAXES SAVE THE WORLD

     Throughout our relatively short American economic history, just when we were about ready to go over the cliff, new policies promoting lower taxes, less regulation, and rugged individualism have sparked strong economic growth, and we, and the world which depends on us, have lived to see another hopeful future.
     This week we must again step back to objectively review the state of our economy as compared to the previous decade.  We must periodically stop, analyze, and employ rational thought to gain understanding, lest we find ourselves amongst the non-thinking masses which morph into the current rhetoric and ideology of the media and whomever is shouting the loudest.
     This week our economic statistics against showed the strongest economy in half a century.  We have unemployment rates which you had been told were not possible ever again, with record-low unemployment rates for African-American and Latino citizens.  We have strong wage growth for middle-class workers, servers, and hotel staff.  We have high labor participation rates, which means that the people who had given up looking for work, or had decided that a government check was a better alternative, have now instead decided to take one of these new jobs.
     This does not happen by accident.  This is not the result of "cycles."  This is not lucky timing.  This is clear cause and effect which us JAM VIEWS members must understand, lest we are later swayed by the economically-uneducated masses. "He who stands for nothing will fall for anything."
     According to Stephen Moore, a senior fellow with the Heritage Foundation, the previous Administration's government stimulus "went for food stamps, unemployment benefits, ObamaCare subsidies, 'cash for clunkers' and failed green energy handouts (see Solyndra or EPV Solar)."  This was when our then-President proclaimed that if you owned a business "you didn't build that."  This focus merely re-distributed the slices of a finite and decreasing pie.  This strategy always guarantees defeat for everyone.
     We must be educated on abundance instead of scarcity.  Growth brings abundance and an ever-increasing pie, which brings more slices for everyone.  Today, with the tremendous jolt to our economy from tax cuts, reduced regulations, and other efforts to get the government out of your pocket and off your back (and some would say their heel off your throat), the Congressional Budget Office (CBO) has grudgingly determined that "higher-than-expected growth will add an extra $1.2 trillion to federal revenue in the coming decade, covering about 80% of the Treasury's original projected cost of the tax cuts.  If 3% growth is sustained for another year, the growth surge will have (already) paid for the tax cuts," according to Senator Phil Gramm.  And after that, all of the extra government revenue is whipped cream on top of the ice cream of an incredible boost for the nation's citizens, themselves.  The current President would assert, "Get the government out of the way, so you can build that."
     And, certainly more grudgingly, even the New York Times this week acknowledged that "Joe Six-Pack" received a nice tax break this year in order to better care for his middle-class family.  It wasn't all to support the rich.
     We have to stay diligent with our rational and mathematical logic, or we will always go with the flow of current thinking, which is almost always wrong, as JAM VIEWS continually highlights.  When the heated debate of the current tax reform was in full force, Larry Summers, a top Obama advisor, wrote in the Washington Post that tax reform would make no difference unless "you believe in tooth fairies and ludicrous supply-side economics."  Mr. Summers followed up about the specific cuts, "I am proudly guilty of asserting that it is some combination of dishonest, incompetent and absurd."
     One of the Friends of JAM (FOJ) sent me the current Wikipedia definition for the Laffer Curve.  This Curve, which illustrates the relationship between taxation and the resulting levels of government revenue, was originally sketched on a napkin in a meeting of Dick Cheney, Donald Rumsfeld, and Arthur Laffer.  The economy has consistently proven that the lower the tax rate, the more wealth for the citizens and the more wealth for the government.  Yet, the Wikipedia listing states, "The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.  There is a consensus among leading economists that a reduction in the US federal income tax rate would not raise annual total tax revenue."  What?  Consensus of whom?  Ridiculous!  This is what our children are being fed in college.  This is why JAM VIEWS attempts to stop us from blindly following the TV show, your professor, the government, your boss, that guy on the corner.  They are almost always wrong.
     Don't be mentally lazy.  Think.  Have a great week!

"Victory smiles upon those who anticipate the changes in the character of war, not upon those who wait to adapt themselves after the changes occur."  -  Italian Air Marshall Giulio Douhet

Many thanks to the WSJ, Forbes, & Fortune for the above statistics and quotations.

** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

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SOCIALIST BUSINESS ADVISORS

     For most of us, when we think of socialism we think of a political construct, like Communist Soviet Union, or Venezuela under Chavez.  But, our loyal JAM Views readers now understand that all politics are about money, nothing else.  Socialism is about controlling the money and, therefore, controlling the people.  Socialism, and all of its euphemistic cousins, takes money from the producers and gives it to the looters under the guise of creating equality.  It was a scam as a first thought thousands of years ago, and remains today the greatest detriment to the forward progress of mankind.
     We are thankful for the President calling out this ridiculous socialist ideology during his recent State of the Union, as the socialist agenda has once again become trendy among the economically-unaware.  The last person, or organization, you want to be in charge of your money is a government.  Throughout history, these entities have a dismal track record for reducing expenses, increasing revenue, achieving objectives, or successfully allocating capital.  Remember, British Prime Minister Margaret Thatcher famously quoted the problem with socialism is "eventually you run out of other people's money."
     Let's review a few current socialism examples getting press in our county:

1.  California's high-speed rail project, initially conceived to connect San Francisco and Sacramento with Los Angeles and San Diego, was approved by voters in 2008 to be funded with a $10 billion bond offering, $3.5 billion in federal government funds, and incentivised private partners.  Construction began in 2015, and, now, New Governor Gavin Newsom has basically pulled the plug on the government project due to the recent estimate of $77 billion to complete!  What a disaster and embarrassment.

2.  California utility PG&E filed Chapter 11 bankruptcy this month as it expects $30 billion in liabilities from more than a dozen major wildfires in recent years caused by its equipment.  This failure is due to the government overseers prioritizing the state's climate goals over safe and reliable service, in other words running a proper business.  The politicians last year approved a $269 million rate hike to pay for "fast charging" stations for everyone's Teslas purchased with other government credits (my apologies for always picking on Teslas to my Academy roommate, the coolest guy on the planet, who has two in his California driveway!), and another $437 million to pay for employee retention programs while shutting down the nuclear plant which produced over 25% of their total power (Did we say "Soviet Union?").  Then, the legislature voted to mandate 100% of PG&E's energy be generated by solar and wind by 2045.  While PG&E was spending a billion here and a billion there on these mandates, they forgot to invest their capital on insulating equipment, clearing overgrown vegetation, and taking other precautionary measures to reduce wildfire hazards.  Now, California politicians are tweeting about the company's focus on profits over safety, even though the politicians are 100% responsible for the disaster. (I once heard a story of how the government shut down an extremely valuable investment company, the golden goose they called it, over a minor regulatory dispute, and then rallied the shareholders and community against the company, all to their own significant detriment.  Unfortunately, this scenario plays out every day in our country).

3.  Now, Bernie Sanders and 16 other Senators are campaigning diligently to replace ALL private health insurance in the U.S. with a government-run single health care plan (Did we already say "Soviet Union?").

4.  Forty Congress members now propose The Green New Deal which includes "a job guarantee program to assure a living wage job to every person who wants one." (I foresee long bread lines).

5.  Elizabeth Warren is demanding a new federal charter for business which would now make companies answer to not only shareholders (the owners), but also to politicians and government oversight groups. (Such as the Politburo?).

6.  And, of course taxes.  Elizabeth also wants to add a new, extra 2% tax not on income or consumption, but just for having accumulated savings and net worth.  This 2% "wealth tax" is government confiscation which even France recently abolished!  No more storming The Bastille!

     Let's stop there this week, as it's probably all our stomachs can withstand.  This week please do your best to help the economically-unaware begin to realize that the LAST "person" you want to run your business, manage your project, or to efficiently allocate your capital is the government.  Take an aggressive stand today, like the President, and call out these ridiculous talking heads.  See through politics and understand money.  That's all there is.  As Margaret foretold, soon they are going to run out of yours.

"The robbed that smiles steals something from the thief."  -  Shakespeare, Othello

* Thank you to Alejandro Lazo & the WSJ, Forbes, & Fortune for the above statistics and quotations.

* For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

* SUBSCRIBE TO JAM VIEWS

* PLEASE USE THE BELOW SHARE BUTTONS TO SPREAD THE WORD!