The Tax Train is Coming

The crisis is here...so is the solution

A Documentary, Doug Orchard Films,

Executive Producer  Laurence J. Kotlikoff, PhD

In 1913, the 16th amendment gave Congress the power to tax citizens on income. First year highest tax bracket was 7%. In 4 years, the highest tax bracket was raised by Congress to 77%. The highest tax bracket in the U.S, was 94% at the end of World War II. In the 70’s, the highest bracket was 70%. In 2018, the top bracket was 37%, which is historically low, the lowest in 80 years. Everything revolves around;

                                                     Debt, Deficit and GDP.

Debt refers to the total amount our country owes. 

Deficit refers to the gap between what our country collects in taxes and spends in a year. 

GDP, Gross Domestic Product is the total value of goods and services produced by our country in a year.

Debt to GDP is at an all time high, except for WWII, when it was at 119%. A concern at the end of WWII was whether or not there would be enough money to continue the war for another year. 

Martin Eichenbaum, PhD, Professor of Economics at Northwestern University, “Deficit to annual GDP is unprecedented because we have normal growth, a good economy and yet an extraordinary deficit.” 

Maya Macguineas, President, Committee for a Responsible Federal Budget, “We don’t want to pay the bills and we keep borrowing, borrowing and borrowing.” 

Nada O. Eissa PhD, Associate, Professor of Public Policy and Economics at Georgetown University,  “This creates a drag on the economy and reduces what the government can actually spend money on. It reduces the rate of growth on the economy and reduces long term revenues as well.” 

Laurence J. Kotlikoff, PhD, Professor of Economics at Boston University and US Presidential Candidates, “When you cut taxes on current generations, you are simultaneously raising them on future generations.” 

Honorable Tom McClintock, Congressman 4th district of California, “Taxes and debt are really the same thing. When we spend a dollar, the only question is do we tax it now or borrow it now and tax it in the future?” 

Tom Hegna, author, host of PBS, “Debt is taking from the future and spending today.” 

Joseph H Davis, PhD, Global Chief Economist, Vanguard, “It is possible that one country can grow out of it’s debt limits generally after a war but we are talking significant economic growth trajectories which would be twice the present growth and not sustainable on a period of 20 or 30 years, but maybe 3 to 5 years.”

Tom Hegna “78 million baby boomers that drove the economy are getting old and retiring.” They collect benefits but no longer contribute.

Ben Bernanke, Former Federal Reserve Chairman, “Our growth is slow for two reasons. One is our population is no longer growing, its aging, so the labor force isn’t growing very fast. So the people working isn’t growing very fast, worker productivity has been slow.”

Martin Eichenbaum “There are a lot of signs that the growth rate of productivity is persistently down. Population growth is persistently down. So the growth rate of real GDP is going to be lower going forward. Debt to GDP, which is growing and GDP is not growing as fast as it used to so that has to constrain our capacity to accumulate debt. That is a really big deal.”

Alan Auerbach, PhD, Professor of Economics, Berkely Director of Burch Center for Tax Policy and Public Finances, “So the US actually looks relatively bad compared to many other countries.  

Tom Hegna, “If one dollar = one second then one million dollars = 11.5 days. A billion dollars = 32 years. A trillion dollars = 32,000 years and we are over 20 trillion in the hole with 125 trillion of unfunded obligations. This is a very, very serious situation .”  

David Walker, US Comptroller General 1998-2008, “Fastest growing expense in the Federal Government is interest on Federal debt. What do you get paying interest on debt? Nothing.”

Honorable Tom McClintock, “President Truman cut taxes and spending, the Federal expenditures went from $85 billion to $30 billion in one year. He had tax reduction to stimulate the economy then serious spending reductions. That was the last time we had serious Debt to GDP of 120%. Today we have reduced taxes. but have not reduced spending - that is where we are failing.”

Armstrong Williams, TV & Radio host, author, commentator, “Reducing debt is not that complicated but politically it is,” 

Alison Acosta Winters, Sr. Policy fellow in Economic Freedom, Americans for Prosperity. “There are many organizations in Washington DC, Congressional Budget Office, Office of Management and Budget, Trustees for Social Security and Medicare, they all say the same thing...We have a fundamental problem in this country and it needs to be dealt with. Instead of paying for all the new initiatives whether they’re tax cuts, spending increases on all the things that we like, the government is just putting it on the national credit card. As a result, our national debt is just going up and up and it is growing faster than the economy. That’s when you know you have a problem.”

Ben Bernanke, In response to the President’s Tax Reform Act, big tax cuts will be paid for by economic growth, “I don’t think any serious nonpartisan analyst of tax cuts will say it will pay for itself. It may help on the growth side but in order to create enough revenue it would require a much bigger expansion than what seems realistic.”

Maya Macguineas, “The government ignores the problem and puts it on the national credit card and debt is growing faster than the economy and that is when you know you have a real problem.” 

Martin Eischenbaum, “The Trump people are betting the tax cut is going to be enough for firms to be more productive and initiate new reforms to pay down the debt, I don’t see any evidence of it other than sort of religious faith and we are taking a hell of a bet. We have to start reforming entitlements, or we will have to raise taxes. People will have to pay more taxes and that is painful. You can’t get away with something for nothing forever.” 

Nada O. Eissa, “The argument that the programs pay for themselves and raise economic growth so much, has no empirical evidence. That may have worked when the top tax bracket was 70% but that time has passed. We just have our head in the sand. So to make up the liabilities we are incurring with all the promises that we’ve made in all the social insurance programs, we are going to have to increase substantially, the tax rate, and perhaps even double it. So, in the next 75 years Medicare spending alone is projected to take up the entire Federal budget.”

David Walker, “Bad news is this was debt financed. Even when you consider the likely impact on economic growth, It is going to add to the debt to GDP. It is another example of Washington wanting to have their dessert first.”

Allison Acosta Winters, “There is an aversion to having a serious conversation about this, People believe the Government will bail them out. There will come a time when that is not going to happen. The Government acts like there isn’t a serious problem.”

Noah Rothman, Associate Editor, Commentary Magazine, “Most likely we will hit the crisis point within the decade. The public will see this as a reason to raise taxes and not to address spending and until we restrain spending there is not going to be a resolution to this crisis.”

Honorable Tom McClintock “How did we get here in the last 10 years with a 35% increase in revenues. It is not a revenue problem. We had a 49% increase in spending. You can’t turn in numbers like that very long before you are in serious trouble.”

Van Mueller, Speaker, Financial Advisor, “It’s the math, 90% of America doesn’t have $140,000, 50% of America arrives at death or retirement with nothing,. I say to my prospects and clients, Is the government going to need more revenue in the future, Yes or no? They all say yes and it is possible they will need a lot more. They are going to transfer wealth from those that have it to those that do not. The 90% of the people in America that don’t have enough money, do have the votes to make sure that money transfers to them from those that have the money. So it is important to do the planning while you are still in control.”

David McKnight, Author, “When Social Security started in 1935 there were 42 workers for every person receiving benefits.The average life expectancy was 62. Today we have 2.7 workers for every person collecting benefits. Social Security was never intended to be a pension plan. Every year the problem gets put off it only gets worse.”

Van Mueller, “Everyone thinks 10,000 baby boomers are retiring per day but that is only the average. The biggest birth year was 1957, followed closely by 1958, 1959, 1960, 1961, 1962, 1963, and 1964. So 70% of baby boomers will retire between 2022 and 2029.We don’t have the money now for all the people receiving Social Security. Where will that money come from. Same thing with Medicare,”

Noah Rothman, responding to the comment and question of Congress likes to kick the can down the road because making tough decisions gets you voted out of office. What happens to our country if they continue to procrastinate? “If we hit insolvency, then triggers come into effect which force benefits to be reduced for a lot of people who can’t afford that. That reality is going to hit extremely hard and no one will allow that to happen but the emergency measures that will have to be taken in order to prevent something like that are dramatic tax increases.”

Van Mueller, ”It is very important that we do a better job of conveying to the American people that this horrendous catastrophe is coming.”

David Walker, “ You know there is a new four letter word in fiscal policy. It’s called math. Unfortunately there aren’t that many people in politics that are very proficient at that. The Gap between projected spending and projected revenues is just to great. You cannot grow your way out of this problem.”

Nada O. Eissa, “That means we have one of two choices, We either cut spending or raise taxes.There are consequences to both of these choices. Higher tax rates, we know, cause distortions in the economy. They likely reduce the rate of growth of the economy, at least at the levels we will have to increase the tax in order to fulfill all the promises we made.”

Maya Macguineas, “We are on a path that is unsustainable because the tax cuts made it so much worse.”

Honorable Tom McClintock, “You look at our current trend on spending, within the next two years we are going to reach a trillion-dollar budget deficit. That is the same as adding $8,000 to the credit card debt of every family in America. This is not a theoretical exercise. This money is owed by your family just as surely as if it appeared on your credit card. In fact, you are required to pay back the government loan first, through your taxes.The IRS is there to insist that you do, even before you start to pay down your credit card bill.That is what a trillion dollar deficit is. Far more dangerous and I asked this question a number of years ago of a panel experts that we had before a Congressional Budget committee: When can we expect a sovereign debt crisis? A sovereign debt crisis is when a government simply runs out of credit and nobody will loan it money. When I asked the experts, well, how long do we have before sovereign debt crisis? And the answer was, well there’s no way to predict that, it could be triggered by any number of developments that are unforeseeable, but, he said, ‘Once you hit trillion-dollar annual deficits, you will have set the stage for a sovereign debt crisis. Things will become unstable very quickly after that.’ And that’s two years from now. Four years after that, our interest costs will exceed what we’re currently spending on our entire defense budget. Just the interest, just renting the money that we’ve already spent will exceed what we’re currently spending to defend our country through all of our military operations.. About three years after that Medicare collapses, and about six years after that, Social Security collapses. And the closer we get to those tipping points, the more draconian are the choices that we’re going to have to try to save them, and as we approach a sovereign debt crisis, we will see markets begin to look at the federal government and say, we’re not entirely sure you can pay back the now more than $20 trillion that you owe.” 

Martin Eichenbaum, PhD, “First of all, no one knows exactly when bond markets are going to decide this is not sustainable. The bond markets will tell us when those yields start going up a lot; sovereign debt yields, interest rates. There is feedback. What you don’t wanna do is wait until the bond markets blow the whistle. So I think what we have to say is do we think the debt-to-GDP is sustainable? By which I mean that if we do our projections outward, that ratio is not exploding, that it is somewhat near our historical levels. I have a lot of concern because when I look at the numbers, and I am not alone, Congressional Budget Office, other objective people, see the debt-to-GDP ratios are really climbing.to levels that are unprecedented, with the exception of WWII and that was a different story, and it’s not cyclical. We are not paying our bills on Medicare or Medicaid.”

Honorable George P Shultz, PhD, “What the current people in Washington think is not relevant to what I am talking about, because there is a reality coming at you, and that reality is going to cause them to say, wait a minute, where are we going to get the money to spend on infrastructure, on military, and so on? The squeeze from the rising debt burden, combined with other things, is going to squeeze out the things they want. So they are going to have to pay attention to it. 

Martin Eischenbaum, PhD, “...more and more of the budget is going to non-discretionary items, which are very hard to cut back. By taking medicare away from a poor person, those are hard reforms. Here you are talking about core, critical things Americans depend on and we don’t seem willing to pay the taxes to fulfill the promises that we made to each other. The importance of the debt has been obscured.”

Honorable George Shultz, PhD, “The importance of the debt has been obscured by the fact that interest rates have been kept very low, now they are rising. So, we have a huge deficit, and the burden of the debt is now contributing significantly to the deficit, and we have a process underway that’s relentless. This is a reality, that the high deficit adds to the debt, so the debt is bigger, interest rates are rising, so the burden of the debt is rising, and as it combines with entitlement overspending everything is going to be squeezed out of the budget. There won’t be anything left. So ,we have a crisis on our hands.”

Honorable Tom McClintock, “Every percentage point that interest rates rise, we end up paying another 200 billion dollars per year just in interest costs. Now, every billion dollars we throw around Washington, that is about $8 from every family in the country. A 200 billion dollar increase in our interest costs which means you will be paying another $1600 dollars for nothing productive just to rent money we already spent. Then you reach the sovereign debt crisis where the markets simple say, we don’t think you are going to be able to pay us back. We would rather borrow from somebody more creditworthy, that’s when you hit the wall.That is not far off. The road we are on is a perilous one that leads to the bankrupting of our country and history is shouting this warning at us.”

Admiral Mike Mullen, AO, MSC retired United States Navy Admiral, who served as the 17th Chairman of the Joint Chiefs of Staff, previously served as the Navy's 28th Chief of Naval Operations, “Our greatest national security threat is the national debt, because before you can provide for the common defense you have to be able to pay for it, and the debt is beginning to threaten our country’s ability to do so.”

Maya Macguineas, “ We have had a number of national security leaders regularly report to members of Congress, that the single biggest threat to national security is the national debt, and that is unimaginable that we would undermine our ability to protect ourselves by being so economically weak.”

Scott Howell, “When you think about China and how they have so much of our debt right now, it’s a scary notion that at any point in time.they could call the note. When we have a debt of trillions of dollars, I can tell you implicitly that it does harm to every major industry within our democracy. When you can raise the debt ceiling and cut taxes irresponsibly without looking at the totality of the picture, I think that is a death spiral. If we don’t take control of this immediately our country will be in a position we have never been in, the debt could paralyze every aspect of our great nation.”

Brian Turney, CEO, Kingman Regional Medical Center, “We have 18% commercial patients, and 82% that are Medicare, Medicaid, or have no insurance, and there is a huge payment disparity between what we are paid by a government payer such as Medicare or Medicaid versus a commercial.” When Brian’s hospital bills a dollar it needs 22 cents to break even. It receives 50-60 cents from commercial insurance or private payers, but only 18 cents from Medicare, and just 12 cents from Medicaid. “ Medicare does not pay our costs neither does Medicaid and that trend is getting worse. What we have to do is try to shift costs onto the private payers. It’s really a hidden tax on the people who are paying for insurance, employer or individual. For example, This year they are planning a 1% increase for hospitals. Our pharmacy costs increased 8% last year and we are estimating about an 8% increase this year. Labor and supply expenses are going up two to 4%. The hospital needs an 11% increase in Medicare payments just to break even. Same issue with Medicaid.” We offer other services that lose significant money.”

If we print more money to pay bills ,we have inflation and benefits are indexed. So that doesn’t help.

Alan Auerbach, PhD, “ Unfortunately, most of our fiscal problem is a future problem not a past problem, it’s servicing the debt we have already accumulated. It is the debt we have yet to accumulate, and these benefits by their nature are indexed to the price level. Social Security benefits are indexed to the consumer price index and when that price index goes up, benefits go up. So if we ran a high rate of inflation Social security benefits would go up so we wouldn’t gain any ground there. Medicare benefits are in kind. You are entitled to go to the Doctor or hospital and prices in general rise because of monetary policy meaning the cost of Medicare will rise.”

Joseph H Davis, PhD, “There is one forecast that I am most confident in my entire career and that will be that in our long term 50. 60, 70, year trajectory of U.S. debt, that forecast will not be realized. Something will happen to prevent that from occurring. It’s just unsustainable.”

Maya Macguineas, “What worries me is the debt stays so high and resources become constrained. That leads to bigger political tensions, the continued kind of tension we are feeling in our country and the unraveling of people believing in the economic dream. It’s a slow, slow spiral. Sometimes people refer to it as the frog in boiling water. Where they don’t even notice that it’s constantly going up, and up, and up. Then they are big trouble and you can’t reverse it.” 

The Honorable Tom McClintock, “The Soviet Union was our nemesis. The most powerful military force on the planet next to ours. The Soviet Union doesn’t exist today, and it wasn’t because they were defeated militarily, They defeated themselves by bankrupting themselves, and that is the path that our country is on.”

Laurence J Kotlikoff, PhD, ” The politicians have been really adept for the last six decades starting with Eisenhower of borrowing money and promising to pay it back but keeping those obligations off the books. What’s an example of a debt that has been kept off the books? Think about a young worker, Joe, who Uncle Sam comes to, and takes some money from Joe, and promises to give him back money in the future. Let’s suppose Uncle Sam calls the money he takes from Joe Social Security Taxes, and the money he is going to pay back to Joe in the future is called transfer payments. He’s in effect borrowed this money now, promised to pay it back, but hasn’t used the words borrowing and repayment of principal and interest. So as a consequence that does not get put on the books. So, it doesn’t add to the deficit. It’s an off-the-books liability. Now here is the problem, if you add together all the debts that are off the books to all the debts that are on the books, you get a number that is much much bigger. We economists call this the fiscal gap. So it’s the present value of all the outlays minus the recent Value of all the receipts. The fiscal gap in the US is not 20 Trillion dollars, which is the size of the gross official debt that is outstanding right now. It is actually 200 trillion dollars. Our official debt-to-GDP ratio is 100%. Our official fiscal-gap-to-GDP ratio is 1000%. I have looked at this for almost 30 years, we need to come to grips with what we are facing, and that requires some adults in Washington. Unfortunately, we don’t have to many of those. The $200 trillion gap that we owe is not a bill that is going to come due in 50 or 100 years, it’s a bill that is due today. It’s the U.S. Government’s credit card bill and if you don’t pay off that balance, it is going to grow with interest. The fiscal gap is growing at about 6 trillion a year. That is our true deficit. You may think this is crazy but there are others who have endorsed fiscal gap accounting. Go to the website theinformact.org , which refers to bill H.R. 2967 to force our government agencies including the Congressional Budget Office, to do fiscal gap accounting. It never passed and most politicians don’t want to tell us what’s going on. Theinformact.org shows endorsements by thousands of economists. Every college, really, every university, almost all of them, are represented. In addition, you have 20 Nobel prize winners. Our fiscal situation is probably worse than any developed country in the world. We are worse than Japan, We are probably far worse than Greece at this point in terms of our fiscal gap as a share of GDP. We are worse than Russia. I think much worse than China. Korea which is aging rapidly. I think we are in worse shape than they are. This isn’t something we can get around by printing money and just expect the rest of the world to pay our bills. It’s not going to happen. It’s going to affect our ability to grow because if we have to have sky high taxes, people’s incentives to work are gonna be much less. They will peel off and go to other countries.”

Nada O. Eissa, “So in the long run, we are either going to cut spending, that is to provide less service, or we have to raise tax rates, and the tax increases are significant. What the generational accounts do is they give us projections about what these tax rates, how much they need to be increased, and that informs the debate.” 

Honorable George P Shultz, PhD, “ I’ve struggled with these issues, and I think the situation right now is really dire. The areas we have to look at are difficult politically but from a strictly analytical standpoint it is clear what to do about Social Security and the health care spending. It’s the healthcare spending that’s the big gusher.”

Laurence J Kotlikoff, PhD, “ You have the government actively trying to hide the information, and actively censoring the studies that come out. We’ve had a number of different government agencies I’ve been involved with or known about that tried to do fiscal gap accounting and it all gets censored at the last minute. It doesn’t show up in the President’s budget and that was censored once by Clinton and once by G.W.” 

Richard Davis PhD, Professor of Political Science, BYU, Chair of the Utah Party, “It’s ideology, and that’s one reason we are not solving our problems. I have been involved with both political parties at some point in time. When they get into office they have to respond to the party bases or they get challenged in the primaries.”

Kathryn L Cole, Head HR Lead. U.S. Department of the Treasury, “Gridlock has always been a major problem in D.C. but now it is probably worse.” 

Gary Herbert, Governor of Utah, “We don’t seem to get along and find common ground.”

Michael J Patton, Contributing writer and editor, Investment Advisor, Think Advisor, Forbes, “There was a study done by Princeton and Northwestern University, that showed a wealthy individual or corporation had a 60% chance to drive a bill through and a 100% chance to stop one. Compared to the general public had a 30% success rate for or against.”

David Walker, “ The truth is the Federal Government has lost control of the budget. In 1912 the Federal Government was 2% of the economy, now it is 21%, more than 10 times bigger,”

Laurence J Kotlikoff, PhD, “Our fiscal gap is $200 trillion and our GDP gap is $20 trillion, a 10 to 1 ratio, that means we’d have to work for 10 years, consume nothing out of the GDP we produce in order to have enough money to pay all the bills coming due." 

Nada O. Eissa, “In various states what we see now is that people are standing up and saying we want services. Someone has to raise the point that if you want services, you have to pay for them..”

Tom Hegna. “ I am trying to help as many people as possible to avoid this disaster that’s going to come up in retirement. When taxes go up and the market goes down. What are these people going to do that haven’t planned ahead of time?" 

David McKnight, “We can implement some strategies this year, that insulate and buffer people from the impact of higher taxes. People have been doing what they have always been told to do. You were told to plow your money into 401Ks and IRAs, get the deduction today ‘cause tax rates are likely to be lower in your retirement than they were today. Mathematically, that makes sense, and that may have even made sense back in the ‘70s and ‘80s but guess what? That is all different now. We are $21 trillion in debt. We gotta raise revenue. Tax rates are gonna be higher in the future than they are today, which means we have to completely change the way we save for retirement. There are all sorts of different investments out there. They basically fit into only three different accounts or buckets.”

The first bucket is the taxable money, meaning every year as money grows you pay a tax. We’re talking stocks, bonds, mutual funds, CDs, Money Markets.etc. you may have to much money in the first bucket from a tax efficient standpoint. The right amount should be six months worth of living expenses.

The second bucket is the tax-deferred money, meaning you pay taxes at the time of withdrawal. We’re talking 401Ks and IRAs, 457s SEPs SIMPLEs, qualified plans.

Don Blanton, President Money Trax Inc, Financial Advisor, “ Qualified plans really do two things: they defer tax and the calculation. The part you are interested in as the customer is deferring the tax. Nobody wants to pay the tax today. Who does? The real question you need to ask yourself is, what tax rate will I be in when I take the money? The government says defer the tax, it is really, postpone the tax.”

Van Mueller, “ Is the Government trying to trick you right now, the answer is very simply yes. Historically taxes are as low as they have ever been in our country. Second, they tell you to take a small amount of money and get a small tax deduction on it. Then they tell you to build it up until it is this huge pile of tax-deferred money out into the future where they can come and tax the bejeezers out of it so they can get the revenue they are going to need to pay for all of these things that they haven’t set money aside for.” 

Ed Slott, CPA, PBS Host and Tax Advisor, “People’s retirement savings are at risk of higher future taxes. It’s the deficits. I mean, it doesn’t take a genius to realize at some point tax rates are going through the roof and you don’t want your money in taxable vehicles when that happens.“

David McKnight, “ Some people look at 401ks merely as a way to save money in taxes, They’re not even thinking about retirement. The real purpose of a retirement account is to maximize cash flow at a period in your life when you can least afford to pay taxes, and that’s in retirement."

Don Blanton, “You call me and say, “Don, I’d like to borrow 10 grand.” I hand you the check. You are going to ask what’s the rate of interest and when do you want to be paid back. I say, “don’t need the money right now, but when I do I will let you know how much I need, so I can calculate how much interest to charge” Would you cash that check? Not in a million years, but you stand in line to do that with the federal government who at this date is $21 trillion in debt.”

David McKnight, “ You could have a million dollars in your IRA but unless you can accurately predict what tax bracket you are going to be in when you take the money out, you really don’t know how much money you have. It’s hard to plan for retirement if you don’t know how much money you have. The IRS keeps track of something called provisional income to determine if they are going to tax your Social Security. Provisional income is any 1099s out of you taxable bucket, any distributions at all from your tax-deferred bucket. If income is greater than $34,000 for a single and greater than $44,000 for a couple the IRS will tax 85% of Social Security at your highest marginal tax bracket. When your Social Security is taxed you spend down your assets that much faster.” 

The third bucket is tax-free money

“ There are all sorts of investments that masquerade as tax free, but I am here to tell you to be truly tax-free, it has to qualify in two different ways. It has to be really tax-free, I’m talking free from federal tax, free from state tax, and free from capital gains tax. The second thing I am looking for in a tax-free investment is no Social Security tax. In other words,when you take distributions from a true tax-free investment, it should not count as provisional income. It should not count against the thresholds which cause Social Security taxation. “

Tom Hegna, “ People ask me, how do we handle this rising tax environment that we are likely to see? And, I say yes, these are likely the lowest tax rates you’re ever going to see for the rest of your life, so what I would encourage people to do is, number one, convert as many things as they can to a Roth IRA. If you can get money out of your 401K, convert that to a Roth, your IRA to a Roth because you will be able to take that money out tax-free in the future. Yes, you are going to have to pay some taxes now, but you get the money out tax-free in the future.”

David McKnight, “ When you take money out of your Roth IRA it does not count as provisional income. It does not count against the threshold which cause Social Security taxation. Roth IRAs are truly tax-free.”

Ed Slott, CPA, “To me, the two most obvious, biggest benefits in the tax code are those Roth IRAs and the tax exemption, the income tax exemption for permanent life insurance.”

Don Blanton, “So, when we talk about life insurance, there is a minimum one can pay for life insurance coverage,and the maximum premium one can pay. Well, who determines the minimum amount of coverage? The companies, the actuaries.They have calculators and what they calculate is how much can they make and still sell this product? And that is the low end. What’s the lowest premium for the maximum amount of coverage? Well, at the other end there’s the maximum amount of contribution that one can put into a life insurance policy, and who determines that besides you, the customer? Well, It’s the federal government. The fact that the federal government of the United States is even remotely concerned with how much money someone would put into a life insurance policy says what? That’s right, it must be good.”

Tom Hegna, Regarding life insurance, “ Why? Because you can take that money out in retirement tax-free. It’s one of the few tax-free ways of taking money out in the future.”

Ed Slott, CPA, “ I’m a tax advisor, I don’t sell stocks, bonds, funds, insurance, annuities, none of that. But as a tax advisor I have to tell you, the single biggest benefit in the tax code, and the most unused is the tax exemption, the income-tax exemption for life insurance, and people are not taking advantage of it. Moving money to tax-free territory is the way to go. You can’t beat a 0% tax rate no matter what Congress does."

David McKnight, “ The only way to truly insulate yourself from the impact of rising taxes is to get to the 0% tax bracket. Why? Because if you are in the 0% tax bracket and tax rates double, two times zero is still zero.”

Laurett Arenz, The Raft Strategy, “ This is why it is so important that we as individuals, take charge of our future and find a way to create a tax-free income for ourselves.”

David McKnight, “People hear this message for the first time say, “I’ve been doing this wrong my whole life and there is no way to undo it” but the reality is, this is actually the perfect time in the history of our country to start repositioning dollars from tax-deferred to tax-free.”

Ed Slott, CPA, “ Many times, when I am doing seminars around the country, people come up to me and said, “Ed, I saw you on TV on your public television special, I gotta tell you, I ‘ve had a financial advisor for years, and I wasn’t getting this kind of information from my financial advisor.”

Armstrong Williams, “ CEOs are taking advantage of tax-free accounts and have been for quite some time.”

Maya Macguineas,  “I think the biggest lesson here is uncertainty. If you don’t put things on a sustainable path, that makes it harder plan in terms of retirement. We also know our Social Security system isn’t sound. So, it is harder to figure out what we need. That leaves a lot of people very confused, concerned, and uncertain about the future holds, financially.”

Armstrong Williams, “ The goal is to, hopefully, get that level of knowledge and behavior filtering and trickling down to the public, I think it is absolutely crucial." 

David Mcknight, “ Right now we have 75 million baby boomers who are on the clock, and every year that goes by where they fail to take advantage of these historically low tax rates is potentially a year on the back end where they may have to pay taxes at the highest tax rates they’ve seen in their lifetime. So, here is the essence of the power of zero paradigm. In a rising-tax-rate environment, there is a mathematically perfect amount of money to have in your taxable and tax-deferred buckets. The taxable bucket you want to have about six months worth of basic living expenses. The tax-deferred bucket, you want your balance in your 401Ks and IRAs to be low enough that when the IRS starts forcing you to take money out at age 70 and a half, those required minimum distributions are equal to or less than your standard deduction. Anything above and beyond those ideal balances should be systematically repositioned to the tax-free bucket, little by little, stretching the tax liability over a period of years, and get all the heavy lifting done before January 1, 2026."

Scott Howell, “ I think people of this baby boom generation and the tail end of it have new tax strategies that have never been seen before.”

Ed Slott, CPA, “When tax rates are low, like right now, it means they are on sale. Remember, these taxes have to be paid. It is not if, but when, so if you actually have to buy something like these taxes to get to your money why not get them while they are on sale?”

David McKnight, “A lot of people ask, “ Can you really be in the 0% tax bracket and be a good person?” We are not suggesting people not pay taxes. In fact, the price of getting in the 0% tax bracket is you have to be willing to pay a tax. We’re simply suggesting that when given the choice between paying taxes at today’s historically low tax rates, or postponing the payment of those taxes until some point much further down the road, that you are probably better off paying them today.”

Maya Macguineas, “During this time of relative economic prosperity, we are the only nation where our debt is continuing to grow relative to the economy. ( source, America Stands Out ,  International Monetary Fund) Other countries are getting their fiscal houses in order, which is what you want to do when your economy is strong. The problem here is, you don’t know where the invisible fence is, when you hit a tipping point and potentially a fiscal crisis and yet the political leaders seem intent on finding out by continuing to bring our debt into basically unprecedented territory.”

Armstrong Williams, “Everyone has their pork project. They have their community center. They have people they want to curry favor with to make sure they get votes. It’s all about the votes. It’s all about numbers. It’s not about you. Listen, you think you are paying astronomical taxes now. We are not going to get this under control no matter how you cut it. Your taxes may double or triple. All you need to do is go to these socialist countries because that is what we are becoming, and ask what they pay in taxes. In some places, 50% to 60% of their money is paid in taxes. I know that is almost unheard of in the United States, but it’s coming to a place in America soon. That place is your wallet , your pocketbook, your hard earned money. We need to awaken a sleeping giant which is the American people, and we tell these scoundrels in Congress, Republicans, Democrats, and Independents to respect our money. We can’t spend more than we earn and can’t live off of credit, we can’t live off debt, can’t live off the interest rate. It will destroy our way of life, my children, my grandchildren for generations to come will have no future. We have to wean ourselves off this debt and we have to start this movement today.”

Van Mueller, “Why wouldn’t America take a look at this if they knew they were going to have to pay a lot more in taxes in the future? Why wouldn’t every American want to be in Control of their taxes? That’s the kind of information that needs to be provided to the American people so they know they can stay in control of their financial and their retirement futures."

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Thanks, God Speed, Clif