A few years ago, Oregon voters approved a measure that raised the top state income tax rate to 11%. That tied it with Hawaii for the top marginal state income tax rate. You don't pay 11% on all your income, just the top portion. Overall, I (Dan Ferris) am paying almost 10% for the privilege of remaining in Oregon.
I put up with it at first. But I can't stop thinking about all that money going up in smoke. So my wife and I have made the painful decision to leave a house and a place we love and move to a state with no income taxes.
We'll miss the mountains outside our window. We'll miss living in wine country. We'll miss the low humidity and mild weather. We'll miss our dream house, which we bought in 2010 after the crisis decimated area home prices.
But we won't miss handing over roughly 10% of our income.
Moving to a no-income-tax state isn't the only thing you can do. If you want to minimize the effect of income taxes, you can also consider investing in high-yield public partnerships:
As I wrote recently to 12% Letter readers...
|
The tax advantages for [partnership] investors can be very good...
|
|
In some cases, you might not have to pay the tax at all... According to the website of the National Association of Publicly Traded Partnerships (naptp.org), "As long as your adjusted basis is above zero, tax on your distributions is deferred until you sell your units." Moreover, "if a unitholder dies and the units pass to his heirs... the prior distributions are not taxed."
|
|
Imagine earning a great income in the last couple decades of your life, incurring no tax liability on it, and then passing the units along to your heirs... who will incur no liability on your distributions, either.
|
That's the way I'm starting to think as an investor. I'm thinking about what my net worth and income situation will look like in five or 10 years. These partnerships – which pay out nearly all their earnings to shareholders in exchange for tax benefits – seem like a good addition to my current portfolio.
In The 12% Letter, we use a proprietary seven-part selection model to identify the very, very few partnerships that consistently create shareholder value by reducing risk and raising cash distributions.
And… we've just found a new one. We'll deliver it to 12% Letter readers later this month. I can't say much about it… but I can tell you it does an excellent job of reducing risk in a business where it's not easy to do that. I can also tell you it's currently paying investors a tax-advantaged 8.5% yield. That's more than four times the 10-year Treasury rate. We're convinced the management team is one of the few that is tightly focused on creating a steadily rising stream of low-risk, tax-advantaged income.
If you want to find out the name of our new partnership recommendation, you'll need to read The 12% Letter. You can sign up for it by clicking here. (Don't worry, there's no long video to sit through.)
We keep the price of this service low because we want to get these income ideas into as many investors' hands as possible. And if you decide within the first four months that the service isn't for you, you can get a 100% refund. We want you to be happy. That's the only way we'll do business.
The yen rallied past 93 to the dollar for the first time in a month after Japanese Prime Minister Shinzo Abe made comments appearing to backtrack a bit on his economic goals.
When Abe took office in December, he pledged to reach 2% inflation within two years. But now, it seems Abe realizes his fallibility...
It's odd, considering that Finance Minister Akira Amari "Babe Ruthed" Japan's stock market in February – calling his shot (like the legendary slugger) by saying the benchmark Nikkei 225 Index should reach 13,000 by March 31.
Although we're sure public officials routinely try to dictate stock market moves behind closed doors… It's very unusual to hear one do so in public. Regardless, Amari wasn't far off – The Nikkei hit 12,600 in late March.
Still, Abe is backing off somewhat. Speaking to parliament, he said the central bank shouldn't pursue 2% inflation "at all costs."
"The economy is a living thing and we don't know what will happen around the world," the Financial Times quoted Abe. "What is important is to aim steadily for the target."
The Nikkei has been the best-performing major index for the past two quarters, up 19% and 17%, respectively. After such outstanding growth, is Abe really taking his foot off the monetary pedal? Not a chance...
In today's DailyWealth, Steve said he still believes Japanese equities will rally.
|
These aggressive actions by Abe should mean Japanese stocks are a one-way ticket higher for 2013.
|
|
Even better, you have a solid buying opportunity right now... After such an incredible run over the last six months, the Nikkei stock index has fallen by 500 points over the last two weeks.
|
|
The Nikkei has fallen in part because the latest economic numbers in Japan haven't been good. The economy didn't grow at all in the last quarter of 2012. And core inflation was negative for the most recent month.
|
|
These bad numbers will only stoke Abe to do more to inflate the economy. And one of the major side effects of that will be a much higher stock market.
|
And in his latest issue of True Wealth, Steve said another country will see a huge market rally as its government takes similar actions to Japan's. That's Russia…
|
"It is hard to see what credentials Elvira Nabiullina has in order to run the central bank," Renaissance Capital chief economist Ivan Tchakarov told the Moscow Times.
|
|
Elvira has the only credential she needs... She is a "friend of Putin."
|
|
You see, Russian President Vladimir Putin isn't happy with his central bank...
|
|
The country's outgoing central bank chairman Sergei Ignatyev had a problem... He's known as an "independent" central banker – one who doesn't bow to the wishes of his government. He has been committed to protecting Russia from inflation since he took over in 2002. And he's been praised for his handling of the global financial crisis in 2008.
|
|
But in Putin's Russia, you can't behave like this...
|
|
President Putin wants economic growth, period. And this old fuddy-duddy Ignatyev was more concerned with preventing inflation than following the wishes of Russia's president. So Putin "recommended" Elvira as the replacement.
|
Like Abe, all Putin wants is economic growth for Russia. Unlike Abe, Putin is dangerous and brazen. (In 2005, he tried on, then pocketed – in front of an entire group – the Super Bowl ring belonging to Bob Kraft, when the owner of the New England Patriots football team was visiting Russia.)
And today, Russia's central bank fell in line... The bank – after raising all interest rates in September – cut rates on loans backed with gold and nonmarket collateral by a quarter point. It's not a huge move, but it's a clear sign Ignatyev is bowing to Putin's pressure. Russia's bellwether equity index, the MICEX, was up slightly on the news.
This is likely just the first of many easing moves from Russia. And we'll hear more from Ignatyev, whose term ends in June, in his official statement tomorrow.
Welcome back to the End of America...
We frequently covered the financial problems of Stockton, California last year… noting the debt-ridden community was emblematic of the crisis Porter dubbed the "End of America." We last wrote about its pending bankruptcy in February 2012…
|
"We're out of money," said Ann Johnson, mayor of Stockton, California. "If players don't come together and agree to a fix that everyone can agree to, then we're in big trouble."
|
|
Stockton officials are entering a mediation process to renegotiate more than $700 million in debt and other obligations to avoid bankruptcy. If the city can't reach an agreement with creditors, it will likely file for Chapter 9 protection, which would make it the largest city in America to declare bankruptcy.
|
|
Stockton has $319 million in debt and $450 million of health insurance and pension liabilities... And the city is using a new California law, passed in late 2011, that allows it to attempt mediation before declaring bankruptcy. Stockton was slammed by the subprime crisis... The city, with a 292,000-person population, currently has a 19% unemployment rate.
|
Stockton is the most populous city to declare bankruptcy in U.S. history. Since 1954, we've only had 62 cities, towns, villages, or counties file for Chapter 9 bankruptcy... 29 of those were dismissed (meaning they found a way to adjust their debt).
But yesterday, Stockton made history... U.S. bankruptcy judge Christopher Klein yesterday ruled Stockton is, in fact, broke. And he chided the city's creditors – including municipal bond insurer Assured Guaranty and investment firm Franklin Resources – for not negotiating in "good faith."
"It's apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law," Klein said.
Stockton's largest debt is the $900 million it owes to the California Public Employees' Retirement System (CalPERS) for its pensions. Stockton officials are arguing it must pay CalPERS 100% of that cash.
Bond insurers (who are among Stockton's creditors) have guaranteed $165 million in loans that the city used to pay CalPERS. They asked why they should receive $0.17 on the dollar when CalPERS will receive every penny. Judge Klein has yet to rule how he will handle the pension issue – but it could have huge implications if more cities across the country go bankrupt.
Porter recently updated his End of America presentation to reflect the changes we've seen since the Federal Reserve's quantitative easing began... While the market has been marching higher, the fundamental problems behind the phenomenon are worse than ever... Our debt is still expanding. Savers are being punished with negative real interest rates. And there's no end in sight. You can watch Porter's presentation here...
New 52-week highs (as of 4/1/13): Targa Resources (TRGP), Johnson & Johnson (JNJ), Prestige Brands Holdings (PBH), Monsanto (MON), Dominion Resources (D), Becton-Dickinson (BDX), Texas Pacific Land Trust (TPL), Enterprise Products Partners (EPD), Procter & Gamble (PG), Sysco (SYY), and GenMark Diagnostics (GNMK).
In today's mailbag… another subscriber describes the beauty of making smart real estate investments. Send your e-mail to feedback@stansberryresearch.com.
"Sometime back in the '70s, we bought a 2 bedroom, 1 car garage rental for $15,000. Made good use of the beneficial laws protecting landlords, and one day the place was paid for, and except for repairs and taxes, the income was all ours.
"Now all these years later it rents for $1050 per month, and we could get more but have a good renter who keeps the property up nicely. Now, if we were to sell this gem for say round numbers like $200,000, where could we get a return that paid over $12,000 a year. Young couples should get into this so as to have a nice income besides wages," – Paid-up subscriber ER
Regards,
Why the president doesn't matter... And Obama's latest fiasco…
There's already talk of who will run for president in 2016. But in today's Digest Premium, Porter explains why it doesn't matter "one iota" who becomes the next chief executive. And he also sounds off on Obama's latest solar-power boondoggle.
To subscribe to Digest Premium and access today's analysis, click here.
There was recently talk of Hillary Clinton and Michelle Obama joining up to run for office in 2016... They've been dubbed "The Democratic Dream Team."
As Digest readers know, I (Porter) am on record predicting the Obama administration will find a way to grab a "third term" in office. I don't know if it will be Obama himself – overturning the 22nd Amendment is politically difficult. I've always thought it was more likely that he would put forward Attorney General Eric Holder as his champion. Holder is a hero to the Democrats. Right now, for example, he's investigating the Wall Street Journal for allegedly paying bribes in China to secure stories.
Still, it wouldn't surprise me if Michelle Obama ran for office. The interesting thing is whether she would be willing to act as vice president...
There's a bigger schism in the Democratic Party than most people realize between Obama followers and the Clinton faithful.
I think a mixed ticket is unlikely. I think you'll either see Eric Holder and Michelle Obama run. Or you'll see Hillary Clinton and some Clinton crony. The Democrats will have to choose between the two... They can't get the Clintons and the Obamas on the same ticket.
But it doesn't matter one iota which group runs... It doesn't even matter if Democrats or Republicans are elected. Neither majority party is in favor of smaller government. Neither is financially responsible.
And both are in the pockets of various special interest groups. They just happen to be different groups for each party. The Democrats are beholden to unions and trial lawyers. The Republicans are in the pockets of government contractors – especially the military establishment.
While we're on the topic of government absurdity, listen to the latest from Obama. He's currently working with Wall Street to securitize renewable energy...
It's ridiculous. And it's amazing Obama would go to Wall Street given his track record in renewable energy. He's batting ZERO. So if you really want to lose some more money, you could invest in Obama's renewable-energy deal.
But first, I'd urge you to read a couple of the annual reports for solar-energy companies. You'd notice how much trouble First Solar, the largest and most established solar company in the U.S., is having delivering on the promises it made to people who spent billions of dollars on panels in Germany and Spain. (You can read the details here.)
The physics of these panels is very suspect. They're inappropriate for use on the power grid for a number of reasons. The first one is called night. Worst of all, they don't seem to work when the average ambient temperature gets much above room temperature. You typically put these panels on the roofs of buildings, where temperatures are usually much higher than normal room temperature. So the whole thing just seems like a giant bubble waiting to burst...
But really, it already has burst. The stock price of First Solar has gone from $225 in 2009 to around $26 today.
In order to generate more capital to pay up to his cronies and supporters, Obama is going to leverage these kinds of companies. Eventually, it will be a disaster. But it won't be a disaster that Obama or the government has to pay for. It will be a disaster the taxpayers get to pay for.
– Porter Stansberry with Sean Goldsmith
Why the president doesn't matter... And Obama's latest fiasco…
There's already talk of who will run for president in 2016. But in today's Digest Premium, Porter explains why it doesn't matter "one iota" who becomes the next chief executive. And he also sounds off on Obama's latest solar-power boondoggle.
To continue reading, scroll down or click here.
Why the president doesn't matter... And Obama's latest fiasco…