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Tom Wheelwright, Tax Free Wealth

With Tom Wheelwright, Wealth and Tax Expert, Author of the book, Tax-Free Wealth: How to Build Massive Wealth by Permanently Reducing Your Taxes

Tom Wheelwright on Tax-Free Wealth

Author and wealth and tax expert Tom Wheelwright joins Steve to talk about his book Tax-Free Wealth: How to Build Massive Wealth by Permanently Reducing Your Taxes

Their conversation opens with a discussion of corporate taxes and changes that might be in the works in that realm thanks to the new Trump administration.  Wheelwright believes that Trump, like Ronald Reagan in the 80s, will attempt to reform corporate tax law before tackling individual taxes.  He notes that the US has the highest corporate tax rate in the developed world, a situation that has led US corporations to stash trillions of dollars in profits overseas.  Instead of getting drawn into an extended tangent on corporate taxes, Steve pivots the conversation to ask Wheelwright how overseas profits and their possible repatriation might affect us average folks.   What might be coming down the pike tax wise that we can benefit from in terms of saving money on taxes and freeing up funds to invest?

Invest in Stocks via Retirement Accounts

Wheelwright believes that there will be no changes to tax law that will adversely affect business owners and stock market investors.  In light of potential tax breaks for corporations, which ought to help them grow and reward shareholders, he suggests holding onto and continuing to invest in retirement funds like 401(k)s and IRAs and mutual funds which give individuals an ownership stake in US companies.

Real Estate and Energy Investment Incentives

Wheelwright segue ways here into a discussion of other types of investments which the government has incentivized with tax exemptions.  He identifies three investment areas which enjoy significant tax advantages: real estate, energy (both oil and gas and green) and small business ownership.

As far as real estate is concerned, Wheelwright is convinced that opportunities in real estate are more accessible to small investors than ever before and that tools and educational resources are more available.  He observes that there is a lot of activity in the lower end (cost wise) of real estate investing, such as condos, duplexes, and smaller units.

The second area of investment with major tax incentives is energy, whether oil and gas or green/renewables.  The tax exemptions here are for direct investment in, for example, oil wells, as opposed to buying energy stocks.  This kind of investment is, of course, not within reach for most of us, but for high-wealth individuals, it offers the “biggest immediate tax impact” of any investment class, up to an 80% deduction during the first year.  Because high-income investors are unable to enjoy the tax benefits of real estate investing (thanks to passive loss laws), oil and gas present an attractive alternative.  Wheelwright cautions against charlatans in the small-scale oil and gas well operator world, noting that a lot of would-be investors have had their money stolen.

Small Business Tax Deductions

The third way to minimize taxes and grow wealth that Wheelwright recommends is by setting up a small business.  This can be done on a shoestring budget by virtually anyone.  It could be a home-based business like an Amazon or multi-level marketing business or a simple corporation set up for some type of freelance work.  The tax incentives relate to the number of deductions that can be passed through the business.  All kinds of deductions based on expenses attributable to the business can be applied to your income taxes: transportation costs, office equipment, depreciation on assets, and more.   Small business tax deductions represent a huge opportunity for those of us without a lot of discretionary cash to invest elsewhere, and they pay off for this year’s tax returns.

Finally, Wheelwright encourages everyone interested in tax incentives not to be intimidated by the supposed complexity of tax laws.  These incentives number in the thousands and chances are good that a number of them will apply to you.  With a good tax advisor, it’s not difficult to find incentives relevant to your situation and to take advantage of them.


Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: Tom Wheelwright is a leading wealth and tax expert.  He’s author of the book Tax-Free Wealth: How to Build Massive Wealth by Permanently Reducing Your Taxes.  He’s also advisor to Robert Kiyosaki, the successful author of the Rich Dad Poor Dad series.  I actually had Robert Kiyosaki on my show many, many years ago, and so I was delighted to see that Tom had worked with him and also Robert Kiyosaki writes the forward in the book.  Welcome to the show, Tom!

Tom Wheelwright: Thanks very much, Steve.  Really, really great to be here with you.

Steve Pomeranz: You know, we just experienced the inauguration of a new presidency.  We’ve got four years of change ahead of us.  With regards to taxes and the incentives that the government gives us all to invest our monies in certain ways, tell us what you think next year’s gonna look like?

Tom Wheelwright: I think it’s gonna be surprising to some people.  I think we’re gonna get, for sure, the corporate tax reform that Trump has talked about and that Paul Ryan has talked about.  I do think we’re gonna see lower corporate tax rates.  We’ll probably see the tax amnesty where Google and Apple and those companies are able to bring their money back at a lower tax rate.  And I think we’ll see some major corporate changes.  I’m not sure that we will see much in the individual area, maybe some in business.  But if you look at the past—I was actually in Washington D.C.  during the Reagan years—and you notice in the Reagan years we had the first few years were very much business and investment tax changes.  There were three major tax changes in the first term, and we didn’t see whole-sale individual tax changes till the second term.

Steve Pomeranz: Yeah.  I was talking to Steve Forbes about it, and he was looking, you know, he’s a big proponent of the tax-

Tom Wheelwright: Right.

Steve Pomeranz: …But he’s now supporting this idea of a two-tier system.  I think a 15 and a 25% tax bracket, or 10 and 25% tax bracket.  But you don’t really see that happening in 2017, you see that more farther years out.

Tom Wheelwright: I do.  I think it’s a big ask.  Trump and the Republicans, they have a lot on their table.

Steve Pomeranz: Yeah.

Tom Wheelwright: You know, when you look at repealing Obamacare, which has tax consequences.

Steve Pomeranz: Sure, sure.

Tom Wheelwright: …And you look at the corporate tax reform.  They’re very tuned in, which is appropriate.  We do have the highest corporate tax rates in the world.  I travel around the world and I see it.  We’re just kind of out of sync there, plus we don’t have a value-added tax, so, we’re really at a disadvantage to a lot of other countries when it comes to our tax system corporate-wise. So, I think that’s where they’ll focus first.  That makes sense.  I don’t think there would be a lot of opposition to it. And then it’s a matter of going to the individual stuff after that.

Steve Pomeranz: Most of us, except for those of us who are shareholders of these corporations, have our own private tax liabilities to deal with.  What happens to corporations is of interest, but what does it mean to me?  Repatriating money from overseas for Apple and others.  What does that mean to me?  So, let’s talk about me and the royal We.  What can we see this year so we can save the most amount of taxes legally and have that excess money to invest and grow our wealth and to have some fun.

Tom Wheelwright: Well—and that’s the right question, of course—and I would say two things.  First of all, most people really are shareholders in these companies through their 401k and their IRA and their mutual fund portfolios.  So, I do think it will have an impact on people’s portfolios, likely, at least, in the short run.  As far as what we do from a tax standpoint, first thing we have to remember is that the tax law is really nothing more than a series of incentives for, primarily, business owners and investors.  And I think the good news for the business owners and investors is, you’re not gonna see anything adverse coming out of this administration, I don’t think, for business owners and investors.  It’s still gonna be that, same as always—is you wanna reduce your taxes,  you don’t have to be a big business, you can start a business in your home.  You don’t have to be a big real estate investor; you can invest in real estate. But there’s huge tax exemptions, you know, huge tax incentives in real estate.  There’s gonna be continued tax incentives, I think, in the energy industry because there are huge incentives there both for green energy as well as oil and gas, and there are huge incentives in business.  I think there’s just an amazing amount that we’re gonna be able to continue to do.  And I think this administration will, you know, it looks like this administration will continue those policies.

Steve Pomeranz: I like the way you present this in terms of not advocating certain ways that government lowers our taxes or gives us incentives, but the very fact that the government decides what to incent.  And, right now, you mentioned real estate, so there’s big incentives tax-wise to invest in real estate and also owning your own business because you can pass through expenses through the business and other factors like depreciating certain assets, which give you deductions off of your reported income and things like that.  So those are two areas.  Are there any other areas besides real estate and owning your own business?  What about the forelorn W-2 employee who’s got nothing else.

Tom Wheelwright: You know, they don’t have a lot.  I mean the tax laws, really, it works against them.  I would say there’s really two, maybe three, logical options for them.  One is that, the one that they’ve been doing, 401k, IRA, you know, postpone the tax to a later year.  You’re a kid, don’t eat your vegetables till the end because you might not have to eat them, right?

Steve Pomeranz: Yeah.

Tom Wheelwright: So, there’s that, obviously.  There are a couple of things that they can do.  First of all, they can start a business.  It’s never been easier to start a business, an internet business, Amazon business, a multi-level marketing business, something like that in your home, you can do that.  They can invest in real estate, it’s pretty easy to invest in real estate these days.

Steve Pomeranz: Why do you say that?

Tom Wheelwright: Well, just because there’s a lot of tools now to invest in real estate.  So, a lot of small real estate investors, we see a lot of people that are investing, either in single family home, or they’re investing in condos, or they’re investing in fourplexes, duplexes, thing like that.

There’s just a lot more education than there was maybe even ten years ago as far as learning how to do that.  The third thing they can do—and this is really for the high-income people that are high-income W-2—they don’t get a lot of benefits out of real estate because of the passive loss rules that came about in the Reagan years, but what they can get, really, their sole tax shelter, so to speak, would be oil and gas.  Oil and gas actually has the biggest immediate tax impact of anybody, and we’re seeing oil and gas at really an all-time low, and, so, maybe, if you think oil and gas prices are going up, maybe it’s time to buy.

Steve Pomeranz: Interesting.  Interesting idea.  Yeah, so go out and buy some oil wells.

Tom Wheelwright: No, it’s actually not that hard to do.  I mean, I’m an investor in oil and gas wells.  You actually get a deduction of up to 80% of your investment the very first year.  So, it’s a pretty big deduction.

Steve Pomeranz: Yeah, but you better be invested in wells that can break even at a pretty low price.

Tom Wheelwright: You better.

Steve Pomeranz: You better.

Tom Wheelwright: And that’s the challenge right now.  And you better be with a driller that’s not gonna steal your money.  There’s just a lot of charlatans out there.

Steve Pomeranz: That’s right.  So, that’s just a minor thing to watch out for.  Someone who’s gonna steal your money. Yeah, so these are areas, but it’s interesting because, again, the government is incentivizing real estate, small business, and we’re talking about oil and gas.  And the W-2 employee pretty much doesn’t have very many options, so, at least, for those of you listening that are W-2 employees, please, please, please, fund your 401ks, start an IRA, use what’s available to you that the government gives to you.  And one other thing that I want to say—look, with all of this energy being put forth on lowering taxes, bringing money home from overseas with corporations, lowering corporate tax rates, I’m not going to project that the stock market is going to do great next year.  Nobody really knows.  But, on balance, it’s going to be good for the economy, which is generally good for the stock market.  So, please, get some stock, buy an S&P 500, even if it’s for $25 or $50, put that away every month.  Let it alone.  Let it accumulate over the many, many years and become part of the haves and not the have-nots because that makes up the final difference. Unfortunately, Tom, we’re out of time.  Do you have final words for us?

Tom Wheelwright: You now, the final word I have is, don’t be afraid of it.  The tax law is actually fairly simple, you know, find a good tax advisor, and look for those incentives that apply to you because there’s literally thousands of incentives in all different areas, from sending your kids to college, to investing in oil and gas, to buying an electric car.  So, there really are a lot of tax opportunities out there.

Steve Pomeranz: All that can be found in Tom’s book, Tax Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes.  My guest is Tom Wheelwright.  Tom, you have a website?

Tom Wheelwright: Yes, taxfreewealthadvisor.com.

Steve Pomeranz: Very good. Stevepomeranz.com is our website. Thank you so much for joining me.

Tom Wheelwright: Thank you very much.

Steve Pomeranz: All right, that was fun.