If you have been reading my blog or newsletter for awhile, you can imagine my view on the new health care bill.  I realize this blog is primarily concerned with asset protection planning, so bear with me while I get to the ‘what’s in it for me’ question. 

I agree with most Americans that the current health care situation sucks.  It truly sucks.  It consumes 16% of our GDP and yet less than 10% of that figure actually trickles down to doctors.  Where is this money tied up?  Primarily in government regulations and litigation.  The mountain of filings and forms that must be filled out is truly a barrier to entry for any aspiring doctor.  Honestly, I cannot imagine wanting to become a doctor right now.

And the grand solution for this disaster?…..Wait for it….More government regulation.  Yes sir ladies and gentlemen, we are going to fix our problem of too much red tape, with more red tape.  3M should figure out how to capitalize on this.  A new analysis by the Joint Economic Committee and the House Ways & Means Committee just estimated that the IRS will add another 16,500 new jobs to examine and audit new tax information regarding the health care bill.  Excellent, just what we needed; more overpaid government workers to harass us each year about an already ridiculously complicated tax system that creates criminals out of citizens who are unable to decipher the code. 

As best I can tell, the CBO, congressional budget office, has yet to produce a reasonably accurate fiscal budget.  Much less predict the future 10 years out.  This new health care bill is proposed to cost taxpayers $938B, but somehow will reduce the deficit by $143B over the next decade.  Huh?  I don’t trust the accountants and economists one bit.  I mean, they never have been right, why start now.

Our job is to provide you with relevant information and news as it relates to your assets.  We strive to seek out the information and relay it back to you in such a way, so you can make decisions on how to manage your wealth and your asset protection plan.  Many of you are likely individual investors and as  of last July, it seems David has won a small battle against Goliath.

You may have noticed in the past few months when you receive your shareholder ballots that if you don’t reply, your broker will send you several reminders asking for your vote.  I know I have noticed it.  And in years past, you received one notice requesting your vote and if you didn’t reply, that was the last you heard of it.

In July 2009, the NYSE Rule 452 was amended to disallow the automatic broker vote.  What  this means is that if you don’t vote, your broker cannot vote for you.  Pre-July 2009, if you didn’t vote, your broker could cast a vote on your behalf.  And 9 times out of 10, the broker would just vote yes to the board recommendations unless there was a major movement to oust executives.

Historically, only about 30% of the shareholder ballots are returned with a vote.  Which leaves 70% with no vote, and before last year, the broker likely just voted in favor of the board recommendations.  Now, without your vote, the broker cannot vote on your behalf, which makes your vote much more important.  This is great news for the small investor.  We actually have won a small battle against the Wall Street behemoths.

I am currently living outside of the US, 7 hours ahead of the east coast so I watched Obama’s State of the Union speech this morning on youtube.  I considered staying up until 4am last night just to watch it because his speeches, whether you agree with them or not, have significant impact on the entire world.

In last night’s speech, I feel like I was listening to my old high school football coach in the locker room pre-game.  It was a lot of rah-rah, but lots of fluff.  He left us with a broad agenda, much of which will never get implemented.  At least I hope most of it won’t.  I am hopeful that his optimism becomes reality, but I’m highly skeptical.

So far he has delivered nothing to improve the lives of Americans, but only burdened our children and grandchildren with huge amounts of debt to repay.  Granted this was initiated by the Bush administration, but he took the ball and ran with it.  In one year the money supply in the US has doubled, which will certainly cause massive amounts of inflation.  He has sent more troops to the middle east, bailed out huge, failed companies that continue to fund his parties campaign, and won a Nobel Prize.  Last week I was in Norway and even they think that is absurd.

One thing that really struck a chord with me in Obama’s speech was his pride in creating 2 million new jobs in 2009.  But where did these jobs come from?  As he stated, these were policemen, firemen, teachers and other public service workers.  He even suggested forgiving education debt for student who enter the public sector.  Interesting.  Maybe he should go back to Harvard for some basic economics courses.

Government is not a producer of economic growth, it is a consumer.  Where do these salaries come from for public service workers?  Taxes and debt of course.  In 2009 under the Obama administration the average private sector job paid $40k per year and the average public sector job paid $70k per year.  The average government worker makes nearly double what the private sector does.

I’m not saying that we don’t need policemen, firemen and teachers, but we do need to be able to pay for them.  And the private sector is the economic growth engine of not only the US, but the world.  The taxes must come from somewhere and without product entrepreneurs and investors to pay the bill, debt is the only option.  We must turn this around.  We are creating wrong incentives and a generation of young people thinking government jobs are where its at.

If we continue to see growth in the public sector and decline in the private sector that can only mean increased taxation for the entrepreneurs and investors.  We will see a brain drain in the US of massive proportions.  It is possible the government is going to limit your ability to work, invest or own assets outside of the US.  This is a scary concept to me.  This is the destruction of liberty.

Now is the time to act to protect your wealth.  You must create an asset protection plan to protect you and your family.  There are numerous ways, regardless of the nature of your assets, to protect them offshore or domestically.  But you need to act now while this is still an option.  Live well.

According to this recent article in Forbes, the IRS has created a new enforcement unit to target high net worth individuals with complex holdings.  This group is called Global High Wealth Industry Group or GHWIG.  This is a direct attack at those with incomes over $100,000 per year.

The GHWIG has broken the income groups into 3 categories; $100k-$200k, $200k-$1m, and $1m+.  From 2007-2008, there was a 24% increase of audits for those earning over $200,000 per year.  The IRS has hired more than 4000 people to increase audit activity and pursue your assets for increase tax revenues.

It is critically important for you take make sure you keep good records for all of your business and investment activities.  This is the easiest thing for the IRS to take advantage of.  It is also important to make sure your asset are properly structured so that you are in full compliance.  This should be revisited every year.  And never talk to an IRS agent without proper representation.  It is best to have a professional.

What the government doesn’t seem to understand is that the high earners in society are the productive business owners and employers.  Anything done to make it more difficult to comply with the ever increasing regulations just removes incentives for the productive in society to continue to produce.  Or worse, they just flee the country to more freedom friendly nations. 

There is nothing illegal or immoral about legally protecting your assets and taking advantage of tax breaks available to you.  But the government seems intent on constantly penalizing you for your efforts.  Make sure you protect yourself from the risks.

I just published the December 10 newsletter.  Good information on how to set up an offshore investment account.  Sign up for the newsletter today.