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Affluent Investor | May 28, 2017

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The Year’s Big Investment Winner? Tax Shelters

Cavuto IRS cap

As I told my friend Neil Cavuto, the big investment winner year-to-date is tax shelters, namely tax-free municipal bonds. That’s what the Obama tax increases have wrought; an increase of the top income tax rate to almost 40%, plus added Obamacare taxes on top of that, causes the highest income group to do the obvious thing: move their capital out of economy-growing private equity markets and into tax-favored municipals. What did you think — that they’re idiots who would stand still for the public shearing?

Of course the results are stagnation, as you see. Right on cue, today the government released their monthly real income numbers and real wages have dropped another 0.3%. Envy hurts the envier more than the envied. Andy Puzder, head of Hardee’s and Carl’s Jr., makes the same point: Excessively high taxes kill growth.

And let’s not have any of that nonsense about how we’re just going back to the Clinton tax environment. We’re not. Yes, Clinton’s top rate was also almost 40%, but he didn’t have the Obamacare taxes loaded on top, and Clinton cut, rather than raised, capital gains taxes. Plus far fewer people were at the top rate with incomes of $250,000 and above in 1993 than are there now. And the hidden tax of highly distortionary monetary policy was not present. Finally, the tax environment includes the international environment, and we’ve gone from one of the flattest tax progressions in the developed world in 1993 to the absolute steepest.

To watch the segment click here. I suggest you grab a sandwich from Hardee’s, watch the clip, clip your muni bond coupons, and wait for your country to come back to its senses.

 

Originally published on Forbes.com.

Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.

Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.

Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.

Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.

Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.

Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.

Jerry lives in Pennsylvania with his wife, Susan, and the youngest five of their seven children.

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