Understanding Financial Implications of the 2024 Election

As the 2024 Presidential election approaches, it’s crucial for Americans to discern what truly matters to them in order to make informed voting decisions.

In today’s episode of Retire in Texas, PAX Financial Group CEO and Co-Founder, Darryl Lyons, dives into the intricate world of financial planning amidst the political landscape. With a focus on key issues like taxes, Social Security, and healthcare, he navigates the complexities of how proposed policies may impact personal finances.

Show highlights include:

*A discussion of the concept of “fair share” in taxes and how it’s often framed in political discourse. 

*A breakdown of the historical debate over the size and role of government in the United States and how taxation ties into this debate.

*Four subplots in the upcoming election that may not be decisive factors in voting decisions but are still important for personal financial planning.

*Why, specifically now, it is important that you stay informed on proposed policy changes and their potential impact on personal finances.

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Hey, this is Darryl Lyons CEO and Co-Founder of PAX Financial Group. Thanks for tuning in to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. So, I’m going to talk a lot of election stuff this 2024 and I want to make sure I kind of get your head working in the right way.

We’re going to have a lot of noise and we need to get in front of that, have a preemptive strike on that noise. So let me share a phrase that you just need to be aware of whenever you hear it, because I’ve been reading a lot on kind of tax issues lately. And the phrase that you’re going to hear a lot of is fair share.

And so, what happens is, is that there’s a problem that needs to be resolved, namely government debt, but also other problems. When we’re going to talk about Social Security, Medicare, you’re going to hear a lot of people say the way we’re going to solve this is the rich or whoever, however they frame them up is going to pay their fair share.

But at first glance, it may seem like that’s appropriate. I want you to be careful with that, because when we take a step back, there’s several ways to look at this. Do they need to pay their fair share as a percentage of their income in proportion to their income, or fair share in a dollar amount? Which one are you talking about?

So, do they like it is a fair share? Do you mean that everyone pays 15% of their income? Is that fair share or are you talking about like everyone pays the same dollar amount? Because we obviously know the dollar amount makes it a bit tricky because then there’s plenty of people that would have a hard time paying that.

But when it comes to the percentages, I think a lot of people when they say fair share, they’re talking about the percentages because the dollar amounts, if you look at the number, it’s a disproportional or today is a disproportional amount of money that’s being paid by the wealthy into the tax system. So, you might say, well that that means there’s too much wealth, that’s another issue to resolve.

I mean that’s not a lack of paying into the system. There are some other underlying conditions. But what you’re going to hear this fair share a lot and there’s just I think there’s some sub questions to ask. The other thing that I like to think about is when you say paying your fair share, who are you paying it to?

And we know that it’s paying it to the government. And this is where we get very much fundamental. Because our country was originally founded, we debated to establish our country. And are we going to have an English type of system or a French type of government system? And then it kind of morphed into are we going to have big government or less government?

And we have not really moved from that debate even today. So, when you say paying fair share, ultimately you’re saying paying to the government, if you use that phrase, people start going, well, wait a minute, that means you’re going to have government with more control. And do we really want that? That’s where it gets really interesting because what’s your track record?

I mean, if I were to evaluate investment, I’d say, what’s your track record of being a good steward of the money I’ve given you so far? So, this is where it gets really squirrely. And then some people would say, well, you know, somebody has got to take care of the indigent and those that can’t afford it. And I still suggest that the government’s not the best to do that.

You say, well, who’s going to do it? And I would say that the Christian community, they can do it, but you just have to figure that out. And they’re doing it now. And if you need evidence, you just have to do a little research. It doesn’t take long. There’s so much work being done by the Christian community to serve in an effective way those that need help.

So, it would be my conviction that we as individuals gave more not to the government, but to directly to organizations that are effective in serving and getting people out of poverty. But that’s a system issue. But the main thing I want to make clear to you is when you hear the word, they need to pay their fair share, it is implying and it’s not a huge leap that the government’s going to have more control.

That’s a real problem. So, let’s talk about the subplots that exist in this next election that are not going to make a difference on who you vote for. They’re just not. But they’re subplots for you to know so that you can make good financial decisions because they will potentially personally impact you. So, you’re not going to make decisions on these subplots that I’m going to share with you.

You are going to make decisions on hopefully who shares your values, who has the best vision for the future in the next generation, and you’re not going to make decisions on who you like or who you don’t like. You may subconsciously do that, but you’re not supposed to. You’re supposed to say who aligns best with my values and my convictions for our country.

So, you’re going to see some peripheral arguments, but they’re only peripheral. And that’s what I’m going to talk about right now. But they’re very important, very important issues. But they’re just they’re not going to be the dealmaker or deal breaker for you. So, let’s unpack these four issues. And it’s all going to stem about all of that. Not all the candidates, some of the candidates are going to try to resolve all of these four issues with one simple phrase, because they are intellectually dishonest.

They don’t know how to think about a critical way of resolving it in a different way. They’re going to say the way we resolve it is somebody else needs to pay their fair share. I want you to say that you’re being intellectually dishonest. I want you to give me a better answer. And so, I want to set aside that phrase for fair share and make sure that you don’t get captured by that one and think critically about these four issues.

First of all, let’s talk about just our personal income taxes. There’s a lot of different stuff going on here that are interesting, one of which is Trump passed these tax cuts in 2017. They’re going to expire at the end of 2025. There’s going to be a lot of debate on how those continue or whether or not they continue, they affect you.

I mean, think about it now. Your standard deduction is super high, and the tax code was simplified. So, there’s some really what I found even personally, is that there’s some really good things in the tax code that you like. You just don’t know you like them. You probably don’t know Trump did it, but it’s that higher standard deduction that has made a lot of our lives easier.

So, a peripheral thing. But are we going to let these tax codes expire or are we going to do something different? So that’s going to be a peripheral debate. So be on the lookout for that. There’s been talk about gas tax relief. You know, we pay about $0.18 a gallon extra for taxes for gas. And so there has been conversation about getting rid of that, a continued advancement towards a simplified tax code.

And then, of course, there’s going to be proposed. You know, we got to make this thing fair. So, we’re going to eliminate them a lot of times they want to let most of the brackets because politically that’s a landmine. But they like to mess with the deductions and the credits. So, pay attention to some of that smoke and mirrors.

You know, it’s really easy to for the rich and I’m using air quotes right now because I’m not sure what that means, for the rich to pay more in taxes and to do it by eliminating maybe a credit that they got or capping the ability to deduct to certain amounts. Now, all I want you to do is be on the lookout for these things because it is smoke and mirrors and you probably want to vote for somebody who’s going to be truthful.

And this might be a clue that they’re not truthful. But at the end of the day, really, I don’t think it’s going to impact your vote. I really don’t believe that. But I do think it’ll give you some clues on how to prepare for your future retirement or even future inheritance, which leads me to the next one, the inheritance tax.

So, this is number two in that Tax Cuts and Jobs Act, they really bumped up that inheritance tax quite a bit to about 26 million. So, anything under 26 million would be subject to an estate tax that’ll go way back down. And so, you got to pay attention to that one for a lot of families. I mean, if you have an estate, you’re thinking, you know, it’s probably a good thing.

But there’s a lot of people out there that are land rich, that are farmers that have big estates that that they don’t have the money, the cash to pay that estate tax bill, which is due nine months after the date of the second spouse’s death. So, it can be a real problem, this estate tax. And if it reverts back, then I think that’s going to cause a lot of people to do some different types of planning.

So, we have got to pay attention to what they’re going to do with this inheritance tax. Now, again, not a main issue, one of those subplots, but pay attention to that. So, number one is personal income tax, number two, inheritance tax. Number two. Well, let’s pay attention to Social Security. If you don’t do anything, doing nothing is a decision.

So doing nothing is a decision with Social Security. And again, it’s one of those intellectually dishonest. It’s a weak posture to be in because Social Security is going to go bankrupt in ten years. And you’re absolutely weak if you don’t resolve this. And so, there’s a lot of different things that you can do. Again, a lot of people are just to say, have people pay their fair share.

Again, please think a little bit better than this one proposal, by 176 member House Republican study. This was and I think it had bipartisan support was to move the Social Security age to from 60 to 69. Right. It’s 67, but you can retire early at 62 and just keep moving that up. There’s a number of different ways you can do that.

I mean, that seems really logical to me. And they would probably do it on like those that are in their twenties and thirties and not people who are about to retire. So please don’t worry about that. I think you can probably expect them to somehow to have rich people again pay their fair share. And so they’ll have to pay more for Social Security.

I definitely see that as a possibility. That would burden small businesses because small businesses match Social Security. There are other creative ways to do this. Like and I know they’re leaning into it, but like there’s auto enrollment into 401k so it’s not Americans are not so dependent upon Social Security. But this is tricky because there have not been any changes in Social Security.

Now, anything material since 1983. And our population is aging. The next generation isn’t as big, and the costs are just getting higher. You know, they’ve got this big trust fund that’s going to run out of money in ten years. They have been a poor fiduciary of investing that money, so they haven’t invested it well. And that’s a problem, too.

So that’s something to consider as well, is being a little bit more guess I guess not going to say stewardship. Yeah, it’s an element of stewardship with that money. So, there’s a lot of different creative ways that you can resolve Social Security, but doing nothing and having the rich pay their fair share are both not only disingenuous but intellectually dishonest.

I’d like to see some more substance behind a strategy for Social Security, not necessarily for the generation that’s receiving it or about to receive it, but for future generations. So, definitely need to have a candidate talk about Social Security. So, number one, individual taxes. I need to see what you’re going to do there. And number two, the estate tax.

I know it doesn’t mess with a lot of people, but we need to get some visibility on what that’s going to look like. Number three, Social Security. What’s the game plan there? This thing’s going bankrupt in ten years. How are you going to resolve it? And number four, the health care system, namely, I’m going to touch on Medicare.

Medicare is going to have some problems here soon. And they said about eight years. That’ll have some problems where the amount of money coming in, again, is a population difference. But the amount of money coming in versus the amount paid out is only going to cover about 90% of what is paying out now. And there’s a lot of people dependent on Medicare and frankly, Medicare is for our clients because we use, we actually people don’t know this, but for our clients only, not for the community, for our clients only, we help them navigate the Medicare market and the Medicare supplement market.

And it’s a unique value that we bring to our clients. And so, once we navigate the Medicare market, it’s generally a good system. But financially, the economics, it’s not going to have enough money in eight years. So, there’s got to be some resolve there. The population is not going to be able to support the current benefactors and then take off into consideration.

Praise God for modern medicine. But it’s expensive to execute. And so, you may get cancer treatment, but that’s not cheap. And if Medicare is covering it, then that puts pressure on the system. So that has to be resolved. And we can’t be, you know, haphazard about it. We’ve got to figure out a way to keep Medicare solvent. Again, that’s a dangerous one because we’re talking about a system that could expand government.

So, we’ve got to do it in a way that makes sense. And there’s a lot of different factors to consider. You could say, well, we just won’t pay as much for treatment. Okay, fine, you don’t pay as much on treatments, then doctors won’t be in that business, You off your doctors and there’s just a ripple effect. Smart voters in this election will think about the indirect consequences of all of these decisions.

So we are, in very essence, trying to hire a commander in chief that shares our values, but also has had the ability to think critically and think about the indirect consequences of the decisions. And ultimately, we want somebody with good judgment. So obviously, we don’t have oftentimes the candidates we want. But with what we’ve got, we’ve got to think through that lens of good judgment, good values.

And when we hear these four issues, they are subplots of other bigger issues, but one that we need to pay attention to for personal planning. Again, in summary, these four subplots are the personal tax situation, namely that Tax Cuts and Jobs Act. Number two, the inheritance tax, number three, Social Security. And number four, the health care system, namely Medicare.

Pay attention to those four things as we come into the election. I’ll keep you abreast as I hear new things coming out. I hear about new proposals all the time. I’ll keep you abreast of that. Stay tuned and be sure to share this with others in the community. And I think I told you guys just recently, but my books just came out and so make sure you pick up that book on biblical responsible investing.

You can get it at all of the major outlets, Barnes Noble’s and Amazon. So be sure to grab that book and as always, thanks for tuning in. And remember, you think different when you think long term. Have a great day.

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