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“…an amusing and easy read—not words often used to describe a tome on taxes.” – Jonathan Clements
“…a book every investor should have and read.” – Ben Stein
“…a very important book.” – Jim Dahle, M.D., The White Coat Investor

The Overtaxed Investor cover

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Who understands the entire tax code? No one.

Finding your tax rate is like shooting a ball into a pin ball machine. You watch it getting slingshot around the board, lighting lights, buzzing buzzers, ringing bells and spinning spinners, falling into holes, hitting the bumpers and the flippers, and only at the end do you look up at the game board and find out what you owe.

Under the new tax code, for the first time in years it pays to take a lifetime perspective on your taxes.

Investment returns are variable, while expenses (including taxes) are a constant. The smart move is to plan around the constants, not the variables. In other words, deal in realities instead of fantasies.

Investment expenses have come down, but not taxes:  time to let the tax tail wag the investment dog.

Investment returns are not under your control. Tax strategy, on the other hand, in completely within your power. Tax alpha is a free good. The only losers are the ones who don’t take it.

Taxes always seem to be the other guy’s problem. But you, dear reader, are that other guy, that forgotten man behind the tree whom everyone is saying to tax.

People in high brackets are paying too much in investment taxes. In California, they pay 33% every year on their dividends and capital gains. A portfolio of carefully selected zero-dividend stocks offers the best after-tax prospects for these high earning/high-net-worth investors.

While you are working, you make all these wonderful big tax-deductible contributions to your retirement plans. Then you retire, and you’re a-rockin’ and a-bompin’ until one day you turn 70 and Uncle Sam says (knock knock), “Here I am!” and forces you to start pulling money out of your retirement plans in ever-increasing fully taxable amounts. Everything gets thrown into reverse.

Retirees can add years to their nest eggs through careful tax management.

Tax Tips

– Set up your investment accounts correctly: those boxes you checked without any thought are wrong and have far-reaching consequences that will come back to bite you.

– Fund all retirement accounts to the limit every year.

– Use the right kind of retirement accounts: if your taxes will be lower after you retire than they are today, go Traditional IRA; if higher, go Roth.

– Manage your accounts on a “Household” basis, placing highly-taxed assets in tax-deferred accounts.

– Keep your dividends qualified and your capital gains long-term.

– Harvest your losses and let your winners run.

– Avoid mutual funds with high internal turnover in your taxable accounts unless you are in the lowest tax bracket, and then avoid them anyway.

– Draw down your accounts in the correct order after you retire.

– Never give cash to charities. Donate appreciated assets instead.

– Use the God-given Statutory Tax Shelters laid out before you like a land of dreams.

– Time to call your estate attorney, because the old will you drafted during the Coolidge administration is wrong.


p. 129: Under “Giving Stock to Children”, only earned income will count towards the 51% support criteria, not investment income.