David shares that he got into the industry during the “calm before the storm.” It was 1997 and, during the State of the Union, President Bill Clinton announced that the national deficit was simply zero. Today, less than 25 years later, the national debt is $30 trillion.
By 2010, however, David Walker – former Comptroller General of the Federal Government and a personal hero of David’s – appeared on 60 Minutes saying that tax rates would have to double in order to keep the country solvent.
2010 also saw David McKnight starting to go around the country trying to warn and help people, and that’s when he developed a presentation, which then turned into his 2014 book The Power of Zero.
David explains that there are three basic types of accounts within which you can invest money for retirement and that the first two – the taxable bucket with yearly payments and the one with payments only at the end – are problematic given the rising tax environment.
David’s focus over the years has been on teaching people how to reposition their money from taxable and tax-deferred to tax-free so that all heavy lifting will be done by the time tax rates increase.
All of the experts David interviewed during his documentary shared the same message: “If we don’t change the course as a country, tax rates within the next 10 years will have to increase dramatically”. Some experts even went further than that, claiming that the U.S. will go broke as a country unless tax rates are doubled.
David’s main goal is “to put 100,000 people on the road to the 0% tax bracket in the next 10 years”.
David illustrates the fiscal gap accounting concept and point of view of Boston University’s Doctor Larry Kotlikoff, who was featured in the documentary as well. His point of view seems to paint a much more dramatic picture with the national debt standing at $239 trillion.
David shares the story of The White Coat Investor, a doctor out of Salt Lake City who believes that David’s advice in his book The Power of Zero isn’t good advice because “tax-free Roth Conversions are the devil”. Despite this, he eventually came around to David’s suggestions.
For David, the country is facing a completely politically-neutral issue: the maths problem of the U.S.’ fiscal problems.
David discusses why everyone should look at LIRPs as a valuable tax-free income stream.
Mentioned in this episode:
David’s books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
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