Mark Udall (D-CO) spent $4,500 of our money to get advice from a wealth management advisory company, owned by a campaign donor, over the last three years, according to a story in the Washington Free Beacon. The company is called BSW Wealth Partners and is based in Boulder, CO.
Setting aside the question of why it’s a taxpayer responsibility for helping a Senator manage his wealth, something the Senate Committee on Rules and Ethics would not comment on, this story raises two issues that must be addressed.
The tax code is too complicated.
Wealth management is tax management. Capital gains taxes, short-term and long-term gain taxes, generational transfers, inheritance taxes, and other such things are critical to any money management strategy. And they are critical only because of the overwhelming vastness and complicatedness of the tax code. No one has the time and energy to understand it in any meaningful sense.
If the tax weren’t so complicated, wealth maintenance would begin and end with figuring out the best return on assets. Investment advice, compared to that of negotiating the I.R.S.’s byzantine regulations, is far simpler. Imagine the money and time that could be devoted to something other than tax-avoidance strategies.
Compliance costs disproportionately hurt the non-wealthy.
It’s not the average American that has thousands of dollars laying around to get advice on how to best negotiate the tax code. But it applies to every single one of us. The expertise needed to understand the tax code is specialized and that doesn’t come cheap.
An uncomfortable irony here, of course, is that Udall is part of the very process that makes tax policy. So there’s an incentive for companies like BSW to encourage complication. It’s time for that to stop.