More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Cafeteria Plans The income tax treatment of cafeteria plans is key to their popularity. Learn how to maximize the tax benefits of these “flexible benefit plans”.
Despite assurances of a postpartisan presidency four years ago, President Obama was re-elected after a contentious (and, until Tuesday, close) campaign—the most divided since Kennedy battled Nixon roughly 50 years earlier. The sentiment holds for the advisor industry, if comments by a number of high-profile personalities are any indication.
“Mr. Obama is a disaster for business and a disaster for the United States,” Marc Faber, publisher of the Gloom, Boom & Doom Report, told Bloomberg Television on Wednesday, noting he thought the market would react with a “drop of at least 50%” on news of the president’s re-election.
Faber also said “I doubt [Obama] will stay at the presidency for another four years. I think there will be so many scandals” and that investors should “buy themselves a machine gun.”
"Not that Mr. Romney would be much better," Faber conceded, "but the Republicans understand the problem of excessive debt better than Mr. Obama, who basically doesn't care about piling up debt. You also have in the background Mr. [Federal Reserve Chairman] Bernanke, who with artificially low interest rates enables the debt to essentially escalate endlessly.”
Peter Schiff, CEO of Euro Pacific Capital and author of The Real Crash: America's Coming Bankruptcy, levied more tempered, if no less direct, comments on The Breakout website on Wednesday.
“No," was Schiff’s blunt response when asked if the country was on track to be better off four years from now.
"If Obama thinks that Bush dealt him a weak hand, wait until we see how much weaker the hand is going to be that Obama deals his successor," Schiff said. "We're going to be in much worse shape.''
How so? By Schiff's calculations, "the stock market is correct in going down" today since he says higher taxes on companies (at the corporate and/or individual level) makes those companies less valuable, according to the website.
Being deeper in debt is another of his predictions, according to the interview, and he expects the country will be at $20 trillion in a couple of years, and going higher from there.
"I think what's going to happen in Obama's second term is going to be a currency crisis, a sovereign debt crisis. It's going to be the same thing that is happening in Europe or Greece," he said, "but it's going to be a lot worse."
Schiff is forecasting higher unemployment, higher food and energy prices and "sharply higher interest rates." He brushed aside suggestions by the website that a current flight to quality is benefiting both Treasuries and the dollar right now.
TrimTabs' Charles Biderman concluded the trifecta of terror with a hard look at the numbers. His conclusion? Unless Obama dramatically changes, Biderman predicts that by the end of his second four-year term Obama “will be the worst fiscal president ever.”
"In 2009, after-tax take home pay bottomed at around $6 trillion annually," Biderman (left) said on the TrimTabs Money Blog on Wednesday. "Take-home pay has risen about 3% to 4% per year nominally since then. However, after inflation take home-pay has grown all of 1% or so. In other words, since Obama has been president, after-tax take-home for everyone who pays taxes is still down by about 5% nominally and more than 10% after inflation."
“My guess is that Mr. Obama and his close buddies have no idea what they are doing, or else they would not be doing what they have been doing,” he added.
But not every industry player was down on President Obama, even if they were no less incendiary.
“Obama election is major defeat of Tea-Party freaks, religious fanatics, anti-immigrant nativists, creationist lunatics, supply-side voodoos,” the economist and NYU professor Nouriel Roubini tweeted the night of the election.
Speaking in Milan on Wednesday at the World Business Forum, Roubini said, “Obama is a positive for the United States and the rest of the world,” but that political strife between parties could nonetheless force another downgrade.
Roubini said Obama would be able to strike a balance between the public and private sectors, something that is fundamental for "a successful economy, which must anchor itself to private businesses, but having the guarantee of public services from the state is fundamental," according to the Italia News website.