Speaker 1: Welcome to another edition of the Chicks on the Right
podcast where we talk to our friend and sponsor of
the show, Zach Abraham from Bulwark Capital Management.
Speaker 2: And today we're going to talk some taxes. We're right
in the thick of tax season and.
Speaker 1: There's been some chatter and Howard Lutnik has talked about
a whole bunch of new tax ideas that the Trump
administration has. But there's one particular policy or idea that's
going around and then I see a lot of Republicans
saying yay too, which is to cut income taxes entirely
for anyone making less than one hundred and fifty grand
a year. I hate this idea, What say you?
Speaker 3: Well, oh, hold on, why do you hate it? Yeah?
Speaker 4: Why why do you hate it?
Speaker 3: Because?
Speaker 1: I feel like every American citizen should have skin in
the game, even if it's a tiny percent, Like everyone
should be paying taxes. Should I actually, everybody making one hundred
and fifty one thousand dollars a year pay and like
the one hundred and fifty thousand doesn't pay anything.
Speaker 4: That makes no sense. I believe in a flat tax.
I think everybody should pay like like I remember Herman
Kane doing Nan Nan Nan, and I really love the
nan Like. I like, just a flat tax for everybody,
no matter what you make, you pay like seven percent rate,
eight percent or whatever. There's a rate and then you're right.
Everybody has skin in the game, but we all have
the same skin, you know.
Speaker 3: Yeah, So let me let me this is a very
nuanced one for me because I used to be First
of all, I hate paying taxes, ie you too. Second
of all, it is the most It is maddening to me,
and it is insulting to me when those same people
that pay almost nothing in are sitting there saying I
don't pay my fair share because I pay a ridiculous
level of taxes. I think my tax will rate last
year was forty one percent. Yeah, so now I'm very
fortunate to be paying that high of rate because it
means that the income level is there. But yeah, I
don't enjoy paying taxes, primarily because of how the money's used.
Right now, Having said that, I think it's really important
when we have a tax policy discussion right like, to
come into it going, look, whatever solution we come up
to or come up with, somebody isn't going to be
happy because it is taxes, right, so somebody's got to
pay it. Right. It's like making your kids eat vegetables. Right,
You're like, hey, I didn't say it was going to
be fun, right, you got to do it. So the
question that I've come down to is I think that
we have to look at our tax policy and look
at it and say, Okay, what is it that we
want this to do?
Speaker 2: Right?
Speaker 3: What do we want to incentivize with our tax policy?
What do we want you know, what what do we
want momentum behind? What do we want to encourage? And
I think that the number one thing when you're looking
at our economy, I think the number one thing that
we want to encourage certainly more of, because we're in
a place where it's never been worse as far as
this one aspect goes, and that is economic mobility. Right,
People being able to change their fate, People being able
to live a better life than the parent their parents did, right,
being able to move up in the world. And when
we look around the world, and this sounds this sounds
very obvious, but when we look around through the lens
of economics around the world and we study what are
what are the things that are the most efficacious in
bringing up standard of living and wealth levels in economies.
And the number one thing, more so than social spending
or anything, is helping through whether it's tax policy or whatever,
to have policies that incentivize and help and aid people
building up capital. Okay, so lower tax rates would be
something like that. So when we're talking about fare, I
think it's I would love the idea of paying as
much as everybody else. At the same time, I'm in
a situation personally where despite the taxes I am paying,
I am still able to build up capital. Right So,
personally I would like to pay less taxes. But if
me paying slightly more enables me to continue to build
up capital but also helps other people as well, it's
something I'm open to right now. The issue I have
with all of this is there's an assumption to be
made that if we're paying a higher level of tax
rates so other people can pay lower, that the government
is using that money wisely and efficiently, and of course
us know that that isn't the case. Yeah, I don't
think there is a personal I don't think that there
is a perfect solution to this, but I and in
favor of people under a certain level of having a
lighter tax burden.
Speaker 2: You may think it's fine, Yeah, it's fine.
Speaker 3: Can you said something I think is that is key though,
Like zero taxes, people need to have some skin in
the game. I would agree with you on that. I
would agree with you on that.
Speaker 4: I think it would incentivize people to only make one
hundred and fifty thousand dollars a year. Well it might,
it would, like seriously, because I have kids, I have
millennial kids, and they they if they're around that range.
If it were me, I would be like, I'm only
going to make one hundred and fifty thousand dollars a year,
Why bother to make it anymore? Because then I won't
get taxed on it? Because why would you go, why
would you go make two hundred thousand dollars a year
and then get taxed on it enough where you're just
going to make one hundred You see what I'm saying, Like, yeah,
well just go make the bare minimum.
Speaker 3: You know if they did that, what they'd have to
do is they'd have to I would think you'd have
to make the first one hundred and fifty thousand dollars
tax for everybody, right, Like, that's that's that would be
the only way to make sense. So then then you
would sit there and go, okay, let's say the tax
rate then from one fifty to two hundred thousand is
twenty five percent, right, so you pay nothing up to
one hundred and fifty, and then you pay twenty five percent,
so you pay ten.
Speaker 2: Yeah, but that's still to her point, that's making me
want to stay at one fifty and not one fifty one.
Speaker 4: It's disincentivizing, is what it is to I think it
makes people lazy. Okay, maybe not lazy. Lazy's probably not
the right one.
Speaker 3: Because remember, we do have a progressive tax schedule like
that right now, and so I, you know, I don't
I don't know about you guys, but I don't sit
there and hit a certain mark during the year and go, okay,
I'm gonna quit making more because that next tax rate
jumps out here.
Speaker 4: It's true, it's true, But but you don't want to
disincentivize them, right, you don't want to disincentivize I just
think flat tax is the way to go, I really do.
Speaker 2: I think it's so hard.
Speaker 4: I don't know, I agree, Mark, I don't know why
it has to be so freaking hard. Just make it, like,
just take a percentage, make it go across the board.
And then you get into the whole social Security issue
where he's talking about no taxes on Social Security income.
Why would you tax that anyway? It's already been taxed.
Speaker 3: Well, let's talk about this. You want to talk about
waste and spending, Okay, think about think about Social Security
and let's think of how many billions of dollars a
year wasted on this? Okay, it is a tax, right,
So then we send the benefit out to the people
that paid that tax, and then we ask them, hey,
send a portion of that back to pay the tax
on the tax that you just received, right Like, I can't.
Speaker 4: I can't.
Speaker 3: Billions are wasted on that process every single year, and
it's ridiculous. How about you just net the taxes out,
send one check and call it square. Yeah, a bunch
of idiots and chasing our tail, right, it's ridiculous. Flipside is, though,
if you have a system that is based purely on consumption,
it sounds fair on the face of it, but it's
not okay. And the reason it's not fair is because
if you have somebody and I hate using the word
fair guys, because I'm a big believer there is no
fair but for the right, for the for the purposes
of this discussion, when you have somebody that is making
five million dollars a year, on balance, they are probably
spending way less than their income per year is a
percentage than the average family that is making two hundred
thousand years. Right. So when you people are like, oh,
that's how we'll get rich people to pay their fair share, No,
the guy making one hundred million a year, the ultra
rich guy, he isn't spending that. He's spending a small
percentage of that in comparison to what the average family's doing.
Speaker 2: Right, But isn't he isn't he spending it on way
more expensive stuff? And that's why the consumption tax makes sense,
because he's being he's buying a yacht or he's buying
a jet or you know what I mean, Like, yeah,
something different than your average family.
Speaker 3: Bigger items. And then so people will go back and
they will say, okay, so let's just tax those things
heavily more heavily, And I go, okay, you're talking about
the uber rich that can move one hundred million off
shore and go to a Bahamian country and buy that
yacht tax free. Right. So like the other thing is,
if you just do consumption taxes, you also incentivize black markets, right,
So you really it's it's and this is why I
bring this up where I'm like, I don't have the
right answer. But one thing I know is when you
go down the avenue of tax policy, whatever you throw
out there there again, it's like what we've talked about before,
there is no perfect tax policy, right, so there is
you probably need a combination of the two. Like maybe
you pay a consumption tax up to a certain level,
and then after that level you pay a combination of
an income and consumption tax. I'm not saying that's what
I support or look at, but what I do know
is that we must make it easier in this country
for people at the lower end of the income range
to build up capital, right to be able to have
more chips in the game. But if we do that,
we simultaneously also need more of a return on the
regulatory side of caveat emp tour. We have to start
returning more responsibility to the individual citizen. One of the
lessons that I would hope and I doubt we will
because we don't seem to learn any of the lessons
that we should. But one of the things that we
need to do in this country is, you know, right
along the lines of what we've seen going on with
social justice and all that other kind of stuff and
all the woke and all that, there are no perfect
solutions guys that don't have costs. Okay, So let's be
adults and recognize the fact that everything has a benefit,
everything has a cost, and what we should be trying
to do is find the greatest benefit with the lead cost.
But there is no costless solution, right. And one of
the things that we have to do in this country
is we've got to start returning risk back to the
hands of the consumer, meaning the government cannot protect people
from their own stupidity. And all you are doing is
driving up the cost on everybody and lessening economic efficiency.
So if we lessen tax burdens on people, we also
need to return to them more economic risk. Right, Like,
there has to be a cost benefit a swap. And
it's like the regular we're sitting there talking about the
regulatory environment in this country. This is how bad it's gotten.
I the other day the other week when markets were choppy.
We're actually having a really nice year and we're up
on the ear. But the other day when markets were choppy,
even though our clients were doing good, I wanted to
send out a quick five to ten minute video explaining
what was going on in markets, not getting specific, and
just saying, hey, guys, don't worry about it. We're fine.
Here's what's going on. It's gonna be it's gonna be
a bumpy ride, but just you know, sit tight, We're good.
Did that video had to go through compliance for a
week and a half before we could send it out.
Speaker 4: Oh my goshaty.
Speaker 3: The regulatory environment has gotten so ridiculous that these regulations
actually impeded your ability to communicate with existing clients, existing clients.
That's nuts, no, it is. And they're putting regulations and
government bureaucrats between clients and their advisors. Advisors, not guys
that are trying to sell them, but existing clients.
Speaker 2: What would happen if you just had sent the video
without going through all those hoops, like, what would have
happened to you?
Speaker 3: Probably nothing? Probably nothing. But with the way the amorphous
rules that this Gary Gensler and and to be fair
to that they were passing these regulations for really since
the financial crisis, but it just kept getting more ridiculous
and more ridiculous. And you look at these regulations come
out and you go, h yeah. The classic case scenario
of a bunch of non practitioners sitting in a room
and thinking that sounds good, and you look at them
and go, if you just talked to one professional, they
would have looked at me and said, Okay, sounds good
on paper. Guys, here's going to be the net refort.
So what the regulation you just passed means that advisors
will be communicating less with their clients. Period. Good job,
that's just crazy. Good job. But but that's what they
don't They don't think.
Speaker 4: And it's a microcosm for our government and for all
for all of this, for taxes, for the I R S,
for everything, for everything that we're talking about. That is
a microcosm for it. Everything has gotten so convoluted and stupid.
Speaker 3: Yeah. Well, and then and then the incentives are all
screwed up, right, So the way you move up in
so many of these regulatory bodies, like the SEC, is
by tacking somebody's skin to the wall. And you go, oh,
did they deserve it? Did they?
Speaker 2: Right? With?
Speaker 3: Your job as a regulator is not to tack a
bunch of guys to the wall. Your job is to
make the industry more safe and more transparent. Right, Yes,
So we've got to rethink this anyway. My point is saying,
whatever we do on the tax level, we also have
to start looking at things through more of an adult
lens and realize that if your job is to make
it impossible for negative outcomes to happen to people, you
will simultaneously be repressing a lot of positive outcomes at
the same time, Right, And there's just no way around that.
And you cannot regulate out the consequences of people's stupidity.
You just you can't.
Speaker 2: Right.
Speaker 3: If you want to be idiots and do stupid stuff
and blow themselves up financially, there is no regulation you
can pass to prevent that.
Speaker 4: Yeah.
Speaker 2: Well, one thing that we love about you is that
you do like to communicate with your clients, and you tried,
despite all the regulations, to do that as often as
you can. What is a way people can look you
up and find out more about you.
Speaker 3: Yeah, well, we've got the twentieth So that's this week
coming up. Our webinar coming up and great, try to
keep it to forty forty five minutes, but in that
forty five minutes, try to explain what it is that
we do differently. We discuss how we're active managers. We
don't just stick your money in funds. We're actively managing
your money on a daily basis risk management, what does
that mean. And then also dealing specifically with this current
market because we are looking at there's no other way
to say it. It's a completely historic situation that we've
never seen before, and investors need to be aware of
it because if they want the gains and most importantly,
if they want the protections, they're gonna have to do
things differently, and they've done them the last ten years.
So we're not gonna throw out conjecture. We're just gonna
show it by facts and charts and data and just
show them, hey, guys, this is why the market's down,
this is why we're up, and to win, I think
we're gonna have keep doing this right, So just walking
them through and just saying, hey, things are changing and
this is what you need to be aware of, and
they can.
Speaker 1: Do that by going to know your risk Radio dot
com Yes.
Speaker 3: And Bowercapitalmanagement dot com and you can sign up for
the webinar there. It's free of charge, and like I said,
if you like what you hear, then you can schedule
an appointment afterwards, talk to me or one of our
advisors and we'll get you squared away. Awesome, Thank yous, Zach,
all right, thank you, ladies. Is fun reservices offered through
Trek financialc and SEC Registered Investment advisor. The opinions expressed
in this programer for general informational purposes only and are
not intended to provide specific advice or recommendations for any
individual or on any specific security.
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be materially accurate, and actual performance may different.
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