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Taxes permeate every facet of our lives.  Interestingly, taxes generated by your investment portfolio is the one area over which you have quite a lot of say about the outcome.

The Supreme Court Justice Louis D. Brandeis once wrote about the importance of tax avoidance in the following way:

“I live in Alexandria, Virginia. Near the Supreme Court chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge.

This bridge was placed outside the downtown Washington, DC area to serve a useful social service getting drivers to drive the extra mile to help alleviate congestion during rush hour.

If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion…if, however, I drive the extra mile outside the city of Washington and take the free bridge, I am using a legitimate, logical and suitable method of tax avoidance, and I am performing a useful social service by doing so.

For my tax evasion, I should be punished.

For my tax avoidance, I should be commended.

The tragedy of life is that so few people know that the free bridge even exists!”

Unfortunately, Justice Brandeis was correct—too few people, including wealth mangers with a narrow focus on portfolio return, take into account the tax implications of investing. Our focus is to help you understand tax mitigation strategies, and to work with you to install a portfolio that operates efficiently. This efficiency can only be achieved by thoroughly understanding the tax implications of each element of your portfolio. As needed, we will engage the services of your tax professional in this work.

Cambridge does not offer tax advice.