Sulzberger Capital Advisors


The Global Impact of the Financial Crisis of 2008 on Individual Wealth Planning

When we think of the 2008 economic crisis now, we see how the impact has been far reaching and ongoing. Individual taxpayers/investors have been left with a changing playing field. What they once knew, is no longer.

There are different rules and realities. This includes how taxpayers now face a lower interest rate environment meant to stimulate the economy, but not necessarily their wallet.

Other things to consider are how governments are changing tax laws and tax rates to help them improve their fiscal situation. This is all affecting individual taxpayers, be they from the US or other countries around the world (many of whom invest their money in South Florida financial institutions).


One of the first and most obvious impacts has been the reduction of interest rates to help stimulate the economy and encourage growth. This is an issue in the United States and numerous countries around the world. Interest rates are at all time lows. For US retirees living off of income, low interest rates on bonds are severely impacting their monthly finances. Many bonds with higher interest rates have been called, and the interest rate on an investment grade corporate bond averages between 2% and 3%. The rates on municipal bonds are even lower. Also, it appears that rates will be low for an extended time. Meanwhile, inflation still exists, and many investments traditionally considered as safe, such as CDs, are offering negative inflation-adjusted returns.

Investors have to choose between cutting back on their spending or going into other investment options to try and generate more yield. The question being raised in many investment meetings is, “Where can I get more income?” Emerging market bonds, preferred stocks, high yield bonds and convertible bonds are more frequently included in the evolving portfolios of many fixed income-oriented investors. This is one of the ways we have explored at PRS Investment Advisory to increase client income. Some investors, however, are not comfortable with these choices and are being forced to make some hard spending decisions.


With governments around the world reeling from budget deficits and economic challenges, the need to increase taxes has been part of the reaction. In Spain, for example, income tax rates increased across the board between 2011 and 2012. In the highest tax bracket, the income tax rate increased from 45% to 52% for 2012. After years of a declining trend, the average top personal income tax rates in the European Union countries increased in 2012. Corporate tax rates in the EU have also risen slightly in 2012.

The greatest increase in tax rates in the EU comes in the further increases in VAT (Value Added Tax).The VAT is a form of consumption tax on goods and services.In 2011, for example, Great Britain increased the VAT tax from 17.5% to 20%. In 2012, Italy increased its VAT by one percent, from 20% to 21%.

Tax increases are looming in the United States, as well, as a way to counter the US deficit and debt issues. For example, if the Bush tax cuts expire at the end of 2012, the long term capital gains tax rate would increase from 15% to 20%, and dividends would be taxed as normal income instead of the current 15% rate.

This is a worldwide issue. Even in the tax haven of the Cayman Islands there is talk of the area's first ever income tax (or, as it is being called, a 10% payroll levy) which would be imposed on expatriate workers only. The world is changing and this is just another area impacting the general taxpayer.


Another area of change is the increase in tax treaties between countries and new global income disclosure regulations in a number of countries. The most notable tax treaty negotiation since the economic crisis began is that between the US and Switzerland.

The US has put a priority on including strong language regarding the exchange of information in these treaties--to require foreign financial institutions to open their books to the IRS or face a penalty on US-based income. This is meant to force Americans to pay income tax on foreign assets that they might be hiding from the IRS. The law was passed in 2010 and is commonly known as FATCA, or the Foreign Account Tax Compliance Act.

Similar agreements requiring the exchange of information on American account holders were reached in 2012 between the US and France, Germany, Spain, Italy and Great Britain.

Other countries around the world are issuing their own new disclosure regulations on its citizens to reveal international bank accounts. The new Spanish Voluntary Disclosure Initiative passed into law in Spain in March 2012. Under this law Spanish individuals and corporations may disclose income or assets that have not been reported by paying a 10% levy on the acquisition value of the property.In doing this, there are no criminal or administrative penalties. The message is that tax evasion in a post–crisis world is something that a number of countries are trying to put a stop to.


It is a brand new day in our global economy. Income that many people have relied on for years has suffered in the shadow of the economic crisis. Investors are reassessing at their investments and re-gauging their spending. Harsh realities are staring them straight in the face.

Governments are tightening the noose around tax avoidance by their wealthier citizens, in light of the struggles governments have had and the prospects for the future of their economies. This, in turn, is causing individual taxpayers, regardless of their citizenship or where they reside in the world, to stay on top of changes in the laws when it comes to their worldwide assets and the taxation of those assets. Consulting with your financial advisor, accountant, and estate planning attorney is more important than ever.

Gene Sulzberger is president of Sulzberger Capital Advisors in Miami, Florida. He works with U.S. and international investment clients, helping them meet their wealth management goals. Gene is a CERTIFIED FINANCIAL PLANNER™ and a registered trusts and estate practitioner (TEP). He is also an attorney who previously practiced law in the area of trust and estate planning. He has over 20 years of experience in financial services. Gene can be reached at (305) 573-4900 or