The Year’s Big Investment Winner? Tax Shelters
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.
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