Presented by: Jeff Bush · 2018-04-03 · • Electoral College. 9/5/2016 9 Party Affiliation Gallup, January 2016 Party Affiliation Gallup, January 2016. 9/5/2016 10 Party Affiliation

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Presented by: Jeff Bush

The views and opinions expressed in this presentation are those of the author and presenter and do not necessarily reflect the views and opinions of the sponsoring companies or their affiliates.

Sponsored by:

Disclosure

Neither Andrew Friedman, Jeff Bush, nor any law firm with which they may be associated, is providing legal or tax advice as to the matters discussed herein. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. It is not intended and may not be regarded as legal or tax advice, and financial advisors and other recipients of this information may not rely upon it (including for purposes of avoiding tax penalties imposed by the IRS or state and local tax authorities). Financial Advisors should consult with their firm’s legal and tax counsel as to matters discussed herein. Clients should consult their own legal and tax counsel before entering into any investment, annuity, estate planning, or trust arrangement, and financial advisors should advise their clients to do sotheir clients to do so.

Copyright Andrew H. Friedman 2014. Printed by permission. All rights reserved.

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Current Focus

• 2016 Election Update

• 2017 Presidential & Legislative Agendas

Fiscal realities facing either party

Income/wealth inequality

2016 Election Review

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2016 Election- House of Representatives

• 2012- Elections

G d iGerrymandering

GOP controls more states

• Democrats need 30 seats

2016- Only 12 House seats in play!

Democrats need the following to gain Senate Majority:

4 (if hold White House)

5 (if t)

2016 Elections - Senate

5 (if not)

Senate Class By Election Year2016

Democrats 10Republicans 24

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Top of ticket candidate is key2016 Elections - Senate

Good Chance for Dem Pick Up

Possible GOP Pick Up Good Chance GOP Pick Up

Fl id C l dFlorida Colorado

Illinois

Indiana

New Hampshire

Ohio Nevada

Pennsylvania

Source: Cook Political Report

Pennsylvania

Wisconsin

7 2 0

Presidential Election Analysis

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SubjectiveObjective

• Party Affiliation• Demographics• Electoral Collegeg

Subjective Analysis

HillaryHillaryvs

TheDonald

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Challenges For the Candidates

Clinton• 3rd Obama term• Email & Clinton Foundation hangover• Known-Known factor

Trump• Equal oppty. motivator (Known-Unknown)• Lack of transparency on finances/taxes• Minority and female support

Opportunities For the Candidates

Clinton• Generally pragmaticGenerally pragmatic • Strong minority support

Trump• Platitudes and attitude• Fervent supporters

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Trump’s Support

“The only way Trump won’t get my

vote is if he breaks into my house andvote is if he breaks into my house and

murders me. And even then I will vote

for him by absentee ballot.”

Trump Supporter

February 2016As quoted to speaker

Opportunities For the Candidates

Clinton• Generally pragmaticGenerally pragmatic • Strong minority support

Trump• Platitudes and attitude• Fervent supporters• Malleable and negotiableMalleable and negotiable

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Trump’s Own Words

“I will be changing very rapidly. I’m very capable of

changing to anything I want to change to.” Donald Trump, February 10, 2016

On The Record with Greta Van Susteren

“You think I am going to change?

I am not going to change.”Donald Trump, May 31, 2016

Press Conference, Trump Tower as reported by The Los Angeles Times

“I am who I am.” “I don’t want to change.”Donald Trump, August 16, 2016

Television interview, WKBT


SubjectiveObjective

• Party Affiliation• Demographics• Electoral Collegeg

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Party Affiliation

Gallup, January 2016

Party Affiliation


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Party Affiliation


Party Affiliation- Unpopularity Contest

Bloomberg polling August 2016

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2016 Elections – Rubber Meeting The Road

Positive

Negative

Net

Qualified to be POTUS

Clinton

Trump

Honest & Trustworthy

Clinton

Trump

Right TemperamentRight Temperament

Clinton

TrumpFox News Poll, July 31-Aug 2, 2016

2016 Elections – Rubber Meeting The Road

Positive

Negative

Net

Qualified to be POTUS

Clinton 65 35 +30

Trump 43 57 -14

Honest & Trustworthy

Clinton 36 61 -25

Trump 36 62 -26

Right TemperamentRight Temperament

Clinton 64 34 +30

Trump 37 61 -24Fox News Poll, July 31-Aug 2, 2016

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Demographics

Electorate 2012 2016

Caucasian 72% 69%

GOP Vote 2012 2016 (1) 2016 (2)

Caucasian 59% 59% 65%

Minority 17% 30% 17%

Minority 28% 31%

Source: Whit Ayres, 2016 and Beyond: How Republicans Can Elect a President in the New America (2015)


Demographics


Caucasian 72% 69%

GOP Vote 2012 2016 (1) 2016 (2)



Minority 28% 31%



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Demographics


Caucasian 72% 69%

GOP Vote 2012 2016 (1) 2016 (2)



Minority 28% 31%



Demographics


Caucasian 72% 69%

GOP Vote 2012 2016 (1) 2016 (2)



Minority 28% 31%



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2016 Elections – Electoral College

Needed to win: 270Democrat Republican

Solid 242 102Lean 15* 41**Tilt 0 48***Total 257 191Shortfall 13 79

In Play 90Source: The Cook Political Report

*IA- 6, NH- 4, NM-5**AZ-11, GA-16, IN-11, MT-3***AR-6, KY-8, LA-8, MO-10, TN-11, WV-5

2016 Elections – Electoral College Paths

No TiltColorado 9

Fl id 29D h f ll 13 Florida 29

Nevada 6

North Carolina 15

Ohio 18

Virginia 13

Democrat shortfall: 13

Republican shortfall: 79

Total 90

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• Republicans keep House.

• Senate majority follows the top of the ticket.

2016 Elections – Split Government Continues

Senate majority follows the top of the ticket.

• Neither party gets 67 votes in Senate to overcome

presidential veto, or 60 votes to overcome filibuster.

• Democratic tail wind in the presidential race.

“[With Mitt Romney,] we tried tall,

good looking, smart, nice, great

family We’re not going down thatfamily. We re not going down that

road again!”

Senator Lindsey Grahamy

Previous Republican Presidential CandidateE2 Summit- Park City, UT, June 2015

As reported by The New York Times

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• Presidential agenda

2017 Administrative & Legislative Agenda

g

• Fiscal realities facing both parties

• Supreme Court

• More pragmatic on Wall Street regulation?

• Entitlement Reforms-

Expansion of Social Security new taxation

Business and Investments - Clinton

Expansion of Social Security, new taxation >$250,000

Medicare access at age 55 and above

• Seek higher domestic spending and higher taxes on the affluent

• Needs assent of Republican House

• Continuation of status quo stalemate

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• Unpredictability concerns markets

• Trade protectionism (tariffs) could hurt US businesses

Business and Investments – Trump

p ( )

• Lower taxes + higher military & entitlement spending would equal higher deficits- a la George W. Bush

• Support from a Republican Congress?

Fiscal Realities For Both Parties

22.0

24.0

Federal Revenue and Expenditures

12.0

14.0

16.0

18.0

20.0

10.02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Tax Revenue Federal Spending

CBO’s January 2016 report The Budget and Economic Outlook: 2016 to 2026

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22.0

24.0


12.0

14.0

16.0

18.0

20.0

$544B Deficit2.9% of GDP

10.02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026




22.0

24.0


12.0

14.0

16.0

18.0

20.0


$1.044T Deficit4.4% of GDP

10.02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026



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22.0

24.0


12.0

14.0

16.0

18.0

20.0




10.02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026




22.0

24.0


12.0

14.0

16.0

18.0

20.0




10.02015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026



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22.0

24.0


12.0

14.0

16.0

18.0

20.0




$590,000,000,000*10.0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026



$590,000,000,000

*CBO Update To The Budget And Economic Outlook: 2015-2016 August 23, 2016


84

86

88

Debt Held by Public as a % of GDP

85.5%

68

70

72

74

76

78

80

82

84

66

CBO Update To The Budget And Economic Outlook: 2015-2016 August 23, 2016

2015 2026

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Domestic$583 (17%)

2015 Federal Government Spending(($3.9T total) in billions of dollars)

Mandatory Programs(Entitlements) $2,555 (65%)

Debt Service

Defense$583 (17%)

Debt Service$223 (5%)

Source: The Budget and Economic Outlook: Fiscal Years 2016 to 2026, Congressional Budget Office (Jan 2016)

Current Tax Rates Historically High“[Current tax] rates are well

above the average rates

[during the past 35 years] for

households in the top of the27 5%

2013 Bipartisan Tax Inc.

households in the top of the

income distribution.”Congressional Budget Office Report November 2014

35%

15%

44.6%

25%

27.5%

66.7%

2012 2012Today TodayOrdinary Investment Income Capital Gains

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Income/Wealth Inequality

“Both parties agree: economic mobility will be a defining theme of 2016 campaign ”a defining theme of 2016 campaign.

Washington Post (January 2015)

“Economic disparities appear to be reaching extremes that are damaging to growth.”extremes that are damaging to growth.

Standard & Poor’s (August 2014)

• Middle class is no longer the nation’s majority.


• Wealth begets more wealth.

Market return 2008-2015: 190%

Wage increase 2008-2015: 15%

Sources: CNBC Nightly Business Report (March 9, 2016); 5 facts about economic inequality Pew Research Center, (Jan., 2014); The American Middle Class Is Losing Ground, Pew Research Center (December 2015).

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• Percent of income earned by top income earners


1980 2015

One percent 8% 19%

Ten percent 32% 45%

Source: Fairness and Tax Policy, Joint Committee on Taxation (February 2015).

Democrats:

Capitalism favors the rich. Government must promote fairness by redistributing income.


promote fairness by redistributing income. Taxation should be more progressive.

Republicans:

Focus on stronger economic growth, not bigger government. Further taxing the wealthy

thwarts entrepreneurial spirit.Source: The American Middle Class Is Losing Ground, Pew Research Center (December 2015)

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• Percent of income earned by top income earners

(% f t id)*


• (% of taxes paid)*

1980 2015

One percent 8% (19%) 19% (49%)

Ten percent 32% (49%) 45% (82%)

**These are the highest tax figures ever recorded

Source: Fairness and Tax Policy, Joint Committee on Taxation (February 2015).

Clean Up and Simply The Tax Code?

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• Tax sale of carried interest as ordinary income

• Curtail “stretch” IRAs and 401k’s

Potential “Loophole Closers”

• Limit Roth conversions to pre-tax dollars

• Apply RMD rules to Roth accounts beginning age 70-1/2

• Treat all distributions from S corps and partnerships to owner-employees as subject to employment taxes.

• Curtail sophisticated wealth transfer techniques

Investment/Tax Planning

• “Tax drag” is a bigger issue for clients

• Harvesting losses, Buy-and-hold strategies

• Municipal bonds master limited partnerships REITs• Municipal bonds, master limited partnerships, REITs

• Annuities, Life Insurance & Tax-efficient mutual funds

• Other professionally managed tax-advantaged strategies

• Hold tax-inefficient investments inside tax deferral vehicles

• 3 bucket strategy- Taxable, Tax Free and Tax Deferred

• Long term care planning

• Candidate & foreign affairs induced market volatility

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Documents

Presented by: Jeff Bush · 2018-04-03 · • Electoral College. 9/5/2016 9 Party Affiliation Gallup, January 2016 Party Affiliation Gallup, January 2016. 9/5/2016 10 Party Affiliation