The Influential Advisor
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The Influential Advisor
067: High Income Doesn't Have to Mean High Taxes: "The Great Tax Escape" insights with Amazon Bestselling Author Eric Pierre
In this podcast episode, I welcome Eric Pierre, CPA and author of "The Great Tax Escape,".
Eric runs Pierre Accounting, with offices in Houston, Austin, San Diego, and Los Angeles. His Amazon bestselling book highlights how high earners can legally reduce their tax burden, challenges common misconceptions about tax planning, and shows how both business owners and W-2 employees earning $500,000+ can benefit from advanced tax strategies.
About Eric Pierre
- Second-generation CPA with licenses in Texas and California.
- Amazon bestselling author of "The Great Tax Escape".
- Stands out in the industry as part of the 1% of Black CPA firm owners.
Inside "The Great Tax Escape"
- Eric reveals how the tax code (40% longer than the Bible) contains hidden opportunities.
- He breaks down complex strategies for both W-2 employees and business owners, also demonstrates how charitable giving can double as tax strategy
- Eric shares how his clients use real estate and conservation easements legally.
How Eric Helps High Earners
- His "Redeem Team" of specialized tax professionals focuses on clients earning $500,000+ annually, turning tax code complexity into savings through court-tested strategies.
Looking Ahead
- Eric advises acting now on Roth conversions and preparing for major changes when Trump tax cuts sunset in the coming years.
- He emphasizes starting estate planning early, especially considering state-specific impacts that could significantly affect your wealth.
Bottom Line Making more money doesn't mean you have to pay more in taxes. With proper planning and the right team, you can legally reduce your tax burden while supporting causes you care about.
About Our Guest: Eric Pierre, CPA and author of "The Great Tax Escape,".
- You can learn more about his work:
https://www.greattaxescape.com
www.pierreaccounting.com
About Your Host: Paul G. McManus is an accomplished author and expert in helping financial professionals grow their businesses. With over eight years of experience working exclusively with financial professionals, Paul has helped his clients generate tens of millions of dollars in fees and commissions.
Claim your free audiobook copy at: www.theshortbookformula.com
Good to see you, Eric. Thank you, Paul. How are you doing? I'm doing fantastic. Congratulations on your new book. I'm holding it up here I'm not sure if it's showing up or not. I just got my copy and I just love the look and feel of it. I believe this is your first book to be published.
Speaker 2:Yes, it's my first book to be published.
Speaker 1:Congratulations. Not only that, but you're now an Amazon bestselling author.
Speaker 2:That must feel good. Yeah, I just wish Amazon gave like a fancy plaque, like YouTube does, because they don't give us anything for that. That would have been nice. So if Jeff Bezos is listening, can I get a plaque?
Speaker 1:For anyone watching this. The question that they're going to have on their mind immediately before we dive into the book is what is that wall behind you?
Speaker 2:That's a great question. It's a sneaker wall, so I'm a sneaker head. I played basketball for a long time in my life. Growing up, my parents refused to buy me those expensive sneakers. I guess I'm more than made up for it. But also I like to use this as a backdrop to remind people that there's a variety of different ways to lower your taxes and not everything looks and feels the same, and that it's customized for what your particular situation is I like that.
Speaker 1:You're a CPA by trade.
Speaker 2:I'm a CPA by trade. I'm actually a second generation CPA. My father, les Pierre, was the first CPA in my family. He's now retired with my mother. They'll be celebrating their 46th anniversary December 30th. He was licensed out of New York. He worked corporate accounting most of his career out here in Houston and I'm licensed in Texas. I'm also licensed in California. My firm is Pierre Accounting. We are in Houston, austin, san Diego and Los Angeles.
Speaker 1:Very cool. I think the first question I have for you is that if I think of a CPA and I have a really good year, very rarely do they say, hey, we're going to work with you to reduce that tax bill above and beyond what you should pay, Instead of you've had a good year, congratulations, now pay your taxes. Personally, I don't like that message. And just what really strikes me about your book one? I love the title, which is the Great Tax Escape. I really love the subtitle, which is why making more money doesn't mean you have to pay more in taxes, and that's, to me, just such a novel idea that immediately my question is I need to know more about this and we'll get into this through the course of this interview. But just from a high level, how are you the same or different from, I guess, what I would call a traditional CPA?
Speaker 2:A little, different for a few reasons. I don't look like most CPAs I mentioned, I believe, in the beginning of the book. 1% of CPA firm owners are Black or African American. I don't know what to call myself these days.
Speaker 2:I've always had to be different. I'm also 6'8". I just think life is too short to make money and then give it all to the government. But the thing is that the tax code itself has 40% more words than the King James Bible, which we consider the longest book. Right, there are a lot of provisions that the government allows for you to mitigate your taxes. I know people at church well, you have to pay to Caesar or to Caesar, but Caesar allows you to take certain tax breaks and a lot of the tax breaks and provisions are there to create, generate economic activity, whether for charitable employment, et cetera, et cetera.
Speaker 2:So a lot of people say they're secrets. In my book I mentioned the secret playbook and should have used that lighthearted. It's a secret playbook because you don't know it, but people like me and my redeem team, we know it and you don't have to be the wealth of Jeff Bezos, elon Musk, damon John, lebron James is a billionaire. You don't have to be a billionaire to take advantage of these tax breaks. You just have to be willing to work with the people that know these things. These are legal. Most of these things are supported by tax opinion letters if it's not directly coded, and they're usually upheld by tax court precedent or cases.
Speaker 1:I think a lot of business owners and entrepreneurs, and just high income owners generally, are frustrated. But why is your typical CPA not telling their clients about the secrets that you've uncovered through tens of thousands of pages of tax code that are all 100% legal and are designed to help high earners legally pay less taxes? Why is this not more commonly known information?
Speaker 2:Paul, that's a great question. So there's a couple answers. One most CPAs. They're really good, we like to help people but we get overwhelmed with the compliance work, and this time we just had our tax filing deadline a week ago, today, at the day of recording. So tax season now is nine, 10 months long and most CPAs are focused on compliance work and they're not well-resourced to delegate the work and then free up time to go work on your business instead of working in your business, right? So that's one.
Speaker 2:And then also in the book we referenced whether it's tax professionals and, excuse me, I don't want to get too much in a foray. There seems to be propensity where CPAs tend to have political views that if you're rich, you should pay more than your fair share, even though we mentioned in the book, the top 50% earners pay 97% of taxes in this country, so they are actually paying their fair share. I think there is some animosity because most CPA firms are not big like Deloitte. Most CPAs. They're either working for small firms that own boutique shops and firms that run a boutique, and I think most of them make, on gross revenue, $200,000 a year or a little less.
Speaker 2:And that's revenue, not income, gross revenue not necessarily profit. Right now the profit might be close because a lot of those firms the owner is usually doing the work themselves.
Speaker 1:Okay, that's an interesting point that I haven't heard before. Which I find fascinating is that, if I heard you correctly and I know that you talked about in your book if you can expand upon it is that it can come down to politics in the sense that your traditional maybe Republican will say is more for lower taxes and your traditional Democrat is more for higher taxes. And so what I hear you saying is that your CPA might just be of the mindset that hey, you've earned a lot of money, now you should quote unquote pay your fair share.
Speaker 2:Most CPAs and I hate saying this because I still struggle with this Like most of us, we're known for not being good business people. You can have the mindset of paying less taxes and not necessarily be right leaning, because one thing, paul, I will tell you I know people who will post oh my gosh, pay your fair share tax. But then they're contacting my colleagues like hey man, I made three 400,000. I don't want to pay 40%. In the book we showed some of the names that are recognizable people in my industry and are decrying the rich, when the reality is I read this the other day 80% of the millionaires in America are first-time millionaires, meaning that they didn't inherit it from their family and they took risk to get there.
Speaker 2:Like I can tell for me, when I started my practice, I didn't have a traditional path where I was in a firm and I took these clients or I had money. I was able to leverage my bank account to buy a practice and buy my job. I looked like Drake, started from the bottom and now I'm here and I've burned through a 401k of 150,000. I almost didn't make it. That's usually what most entrepreneurs do and the tax bill quite frankly rewards entrepreneurs why they want entrepreneurs to be successful so that then they can hire more people than tax the workers. It sounds crass, but that's what it is. And, by the way, for my colleagues that brag about Democratic people that are left-leaning, some of the biggest users of well-known tax breaks, like Jack Ma, do things like conservation easements. He's left-leaning and he's used real estate tax strategies with Amazon to expand all these warehouses and then not pay taxes for many years using seller depreciation, by the way and he's very left-leaning.
Speaker 1:So expand upon that a little bit, because that's an interesting tie-in. So, for example, you had said earlier that these are legal because the Congress wrote these laws. Incentives to create certain behaviors, and in the examples that you just brought up with, say, Jeff Bezos, he's taken advantage of incentives, but they also align with say his political leanings yes.
Speaker 2:And then Amazon is known for hiring. They've created a lot of high paying jobs. When I go to my barber out in far West Houston I drive by a massive Amazon warehouse. That was never there because I grew up in Katy. And there's a big Amazon warehouse in Katy and their drivers making $150,000, $200,000 a year delivering things that we use every day.
Speaker 2:And, by the way, one example in this very controversial is conservation easement. But if you understand conservation easement, a lot of public parks we go to, golf courses, beaches a lot of them are actually through conservation easements, where the plan is set aside for the public use. There's a lack of education about these things, which then causes a resentment. And before I go on, I think part of the issue is that I think people need to separate what people do with their money that's necessary to make them immoral, versus maybe you should look at yourself and clean off what they're doing and then you can get some of that money and then you can make the impact in your neighborhood. And Jeff Bezos he's out there in his public life but he did donate millions of dollars to build a museum in honor of the late John Lewis, one of the civil rights congressmen.
Speaker 1:So my takeaway from what you're saying is that, whether you're left-leaning or right-leaning or anywhere in between, there's tax incentives that will align with your values, and so the through line is that. So who is your ideal reader and, by extension, who is your ideal client? Who are the people that you work with day to day to help them keep more of their hard-earned money?
Speaker 2:I would say people clientele that make $500,000 or more and that can include W-2. That's the level where me and my redeem team, where we work best To take advantage of those tax breaks often involves some sort of financial investment and we found that usually at that income level they have some of the disposal income available. Make those investments, invest in the strategies that provide the multiple to either significantly lower their tax by 56, 7% or some years you can make it zero.
Speaker 1:So $500,000 is typically the entry level to really fully take advantage of these tax strategies. And I think that kind of goes back to my earlier question. Which is why probably a lot of people are just unaware of these things is that that's a fairly small percentage of the population that earns that much money.
Speaker 2:Yes, you probably talk about maybe 3% of population. Yeah, gemini says 2% of population, millionaires and up, when you exclude the personal residences, probably about three or four.
Speaker 1:Yeah, and I heard you say a couple other things that I want to dig into a little deeper W-2s versus business owners. I don't know if it's misconceptions or what, but a lot of times W-2s, rightly or wrongly, that there's not tax strategies for them. Can you share a little bit more about that?
Speaker 2:Yeah, that's incorrect. So W-2s, they're tax strategies. Often there are limitations on some of the strategies. However, if you make over $500,000, for instance, I work with a client of mine who was W-2 for a really large tech company and he made over a million dollars in income His total tax bill between federal and California working with us was about $200, 200. It's about 20% total. 20% total when he was in the 50% cut line. In fact he overpaid by a total of around 300,000. He's starting his own thing. He'll get some money back to be able to invest into his startup business. Actually, you just have to work with the right people that have studied the code and also are proven. So for me, I do keep a list of references. You actually can read to my references at the beginning of the book. One of my clients is a developer. One of them is somebody that's very famous that does get substantial W-2. That individual is on TV every Sunday.
Speaker 1:For the purpose of book sales. I have the book here but I am not going to read the names. You have to get the book to know what we're talking about. I also heard you mention a word the redeem team. What is the redeem team?
Speaker 2:So the redeem team that's just my pet name for the team of specialists that help me serve my high network clients on these tax strategies.
Speaker 2:There's a group of us some are CPAs, some are financial advisors. Some of them have different licenses, because there are far more tax strategies than there are sneakers behind me I have over 200 total, by the way and so we get together, we vet these strategies out. They're highly scrutinized, and so then, depending on the client, if you're one of those high net worth people, I do initial call to get an understanding of your income and then what do you want? Right? Some people are very charitable minded. Some people are like look, I just want to save a bunch of cash so I can buy a car or buy a house or invest in this, and I'm basically your bespoke tailor when it comes to the tax code. And if you go to a tailor shop, in the back they have several people working with them to do the hemming and the sewing. And so that's who I call the redeemed team, because these people I consider my peers, so I know we've talked about a number of things.
Speaker 1:Are there any common misconceptions or tax myths that we haven't discussed so far that you think our audience should know about?
Speaker 2:Yes, one of them that I'll gladly discuss. If I do an advanced tax strategy, I'm going to be audited. The answer is not necessarily I discussed in the book. The IRS has admitted a audit on average of maybe one of every 500 returns. So again, with these advanced tax strategies, depending on what they are. So, for instance, I mentioned conservation easements earlier because this one's been publicly talked about, that one's actually written in the code and so if you were to invest in something like that, there's a multiple that they have to follow. Partnership NC has a file to return and you have to give the appraisal with it.
Speaker 1:Now someone like Ted Turner. He bought a bunch of land in Montana and used that to lower his income when he owned Turner Networks. A couple of points of clarification. A very basic one when you say advanced tax planning, what is that, or how is that different from just what people do year to year? How would you describe advanced tax planning?
Speaker 2:Advanced tax planning. Part of it is you get together with your tax professional or strategist I'd say September or if you're about to do a transaction and then you may implement, like accelerated depreciation For some people they just need they bought a $2 million building. Depending on the bonus depreciation they might be able to get a million of it and I've seen it. It's legal. A million dollar write-off. Let's say they have $800,000 of ordinary income. They're a qualified real estate professional. That million dollar depreciate expense puts their income down to zero.
Speaker 1:So, from what I'm hearing you saying, it's strategies that are typically not your cookie cutter the ones Instagram.
Speaker 2:Hire your family, which you should do. If you can talk about the augusta rule, that's cookie cutter because it's spelled out in there. It's a good one, by the way, but these are things that you hear over and over again. Right, hire your family. Max out your roth on that. And I'm not knocking these strategies because I have a sep I've used to. Now what's advanced is that I have a sep that I used to invest in a business investment. I need to convert to Roth before they put distributions, because then I can grow tax-free and circumvent the Roth limitation for income.
Speaker 1:So, just in terms of the people that your typical high earner works with, I'm going to make an assumption here is that they might have a CPA, they might have a financial advisor. Where do you fit into that? Do you complement that or do you essentially replace that in terms of the work that you do?
Speaker 2:It depends. I have a client that I work with. They have a CPA, but their CPA doesn't do advanced so I just do strategies for that client. For other high network clients I've replaced their CPA. I'm not a licensed RIA so I don't know. I can tell them the tax implication of investment, but I can't really tell them if it's a good investment or not.
Speaker 1:In the book you talk about empowering financial freedom, and how would you expand upon that Just from your general viewpoint? How do you help them with their financial freedom more broadly?
Speaker 2:It's going to depend on their objective right. Some like to give a lot to charity. In the book I think we gave an example of somebody that gave a lot of money in their community forwarding educational things. I had a big year last year because I saved on taxes, I was able to provide on HBCU in Austin a nice generous five-figure investment, able to provide six-figure donation for inner city causes in Chicago where I used to live. What makes me unique was that I also live these things out. I've been fortunate, by the grace of God, that my business grew to the point that I had to use these things.
Speaker 1:So you mentioned some charities and just philosophically, or even just more broadly speaking, when you get into that really high income space, do you find that people are naturally charitably inclined, or does it go hand in hand with some of the tax strategies?
Speaker 2:Well, that's a great question.
Speaker 2:I think it goes long hand in hand.
Speaker 2:Some people with the strategy ends up being more because they weren't aware that, oh, I can make this investment benefit, this cost and lower my tax Because normally like for instance, we worked with a group where there was a technology for skin burn and people didn't know for every $1 you put in, you're getting a 5 to 1 benefit and then that product actually got FDA approved this past year A lot of people are charitable client but they don't necessarily know that their money could be put because typically you think, okay, I got to check United Way and then you never see it again, I don't get much benefit.
Speaker 2:Some people may not be trusting their churches, but if you show them legitimate causes that benefit them, or even something simple, and if you have a big year, you can set up a donor advised fund, hold up your schedule, a deduction and then spread over five years. Some people don't realize that they can actually load it up and control it and spread it out. It's just a lack of education, because I tend to believe in humanity, that most people are kind and want to help. They just don't always know how.
Speaker 1:You had mentioned earlier about, I think, one of the greatest fears for any high income earner it's I want to keep more of my money. I want to not run afoul of the IRS. In addition to what we've already talked about, are there any other misconceptions or things that you can share with us that allay any concerns about IRS audits? What should people know about that?
Speaker 2:If the IRS sends a notice about your tax return, it doesn't necessarily mean they're going to audit you off the bat. Sometimes they need more information. Sometimes these advanced softwares, there's these forms that don't get attached Just because they audit you doesn't mean that you're going to give money back. I was audited by the IRS in 2017. The reason that they triggered because at the time I didn't have an office. I was driving all over San Diego. So they said, sir, as an accountant, your mileage was awfully high. You reported 25,000 miles. Yes, I don't have an office. I went to the IRS agent. I used an app called Everlance and I gave him a log this big. They looked at it and said sir, we actually owe you money, but we're not going to do it. She was like what? And the lady was so upset she thought she had me.
Speaker 1:So in your own case that happened, and was it as bad as people fear?
Speaker 2:No, you just have to keep good documentation. One of my high network clients actually got a letter about a strategy. We sent the doc, they adjusted it and somehow he got an extra $100,000. Okay, he got a refund.
Speaker 1:I know that there's a difference between you in your role and, say, an investment advisor in their role. How do those things come together from your perspective when it comes to retirement planning?
Speaker 2:Under the retirement plan. We can help show the impact, the tax savings, because you can have your own when you have a business. You can have your own defined benefit plan. You can have a solo 401k. We can show you the numbers, the delta Now, how it grows, you work with the advisor and how you hold the asset. But we can also educate you on having self-directed retirement plans. I used to work with a real estate developer. I learned about the self-directed IRA when the client had a construction company and a lot of wealthy people were using their IRAs to invest into that company. My real estate developer clients that make a lot of money. They have massive depreciation. We might be able to convert some of their regular IRA to Roth, but the income with the tax comes with it might be wiped out by some of our strategies. So that's the difference to working as strategists, because regular CPM is to know you can't do that and I'm like there's another way 100%.
Speaker 1:Anything else about retirement that we haven't touched upon.
Speaker 2:If you're going to do a Roth conversion, I suggest you might do it next year before the government starts to make it harder to do.
Speaker 1:Tell me more about that. Is that the Trump tax cuts?
Speaker 2:Yeah, part of it's that, and there's also talk, depending on who's in office, that might be taken away. I wouldn't waste time on that, because, in fact, you want to make sure you get your retirement planning airtight, particularly wealth, because I do believe in our lifetime that you are going to see wealth tax, so you may want to get your affairs in order, meaning tax on your total wealth. You make various proposals about carried interest tax, increased capital gains with the Trump tax sun setting estate tax thresholds drop down when we do business California. If a single person has $6 million, that might be their home. That's not a lot of money in California and New York or now South Florida the price of that.
Speaker 1:Next couple more questions, while I have you Leaving a legacy. I know we talked a little about charities, and is there anything else that you would share with us about your book or your message about leaving a legacy behind?
Speaker 2:You can also leave a legacy behind, like with a trust. Right, I have my own trust and there's 30 or 40 different types of trusts, so you want to get with a state plan attorney, but before you do that, you want to know who you're going to leave stuff behind for. So I'm single. I've never been married, so right now I have family members and also have charitable organizations that would inherit my assets, because you don't know when you're going to die. You should always have that. And also another way that you can for legacy is looking for various life insurance policies. There are policies out there that aren't very expensive and you can even have them set up with irrevocable trust to make the proceeds tax-free to beneficiaries. So everybody should look at that. Everybody can afford life insurance. It's heartbreaking to see how many people don't have their state set up. There's a lack of financial education.
Speaker 1:Now I have a very important question for you. If something were to happen to you, who is inheriting that wall of sneakers behind you?
Speaker 2:According to my will, it'd probably be my sister.
Speaker 1:Victoria, you might want to go ahead and sell them. Final question For someone who wants to get a copy of your book or to follow up with you what are the best places for them to either find your book or to reach out?
Speaker 2:To find my book, you can go on Amazon and type Great Tax Escape. Eric Pierre, we have a website dedicated for this book greattaxescapecom. You can follow the prompt. There's instructions how to get a hold of me that way. Or, if you want, you can also go through my firm's page, pierreaccountingcom. Perfect.
Speaker 1:Any final thoughts or takeaways before we wrap up today's interview?
Speaker 2:I would say if you're making a lot of money, you don't have to be stressed. You can bask in the sunset knowing that if you work with me or someone like me, we can get you to pay a lot less than 50% total taxes.
Speaker 1:Just going back to the subtitle, why making more money doesn't mean you have to pay more in taxes is a truly compelling message that every high earner needs to know about. Eric, thank you so much for your time today. I enjoyed the conversation.
Speaker 2:Thank you for having me, Paul.