Contents
If you’re like most people you properly hate paying taxes.
If you’re also like most people you properly pay more taxes then you should.
For those of you who follow my blog you may recall I wrote an article called What Income Do You Work For?
If you have yet to read this, click here because it is the most important article on this blog.
One of the reasons I started on the subject of income amongst everything was to point out that we are not all equal under the tax law.
What this means is, different classes pay different taxes, and that’s just one of many secrets of the tax law.
One of the reasons why the rich get richer, while the poor and the middle class struggles is because rich people uses tax laws to their advantage.
They understand how it works, and who it protects, knowing this gives them huge advantage over the poor and middle class.
Another reason the rich stay ahead is they have extreme control on how much taxes they pay.
By knowing the tax law and their rules they develop their own strategies to pay less, sometimes zero taxes legally.
The good news is you don’t have to be rich to do this. You just have to be willing to take action.
You can start by educating yourself, reading books, or simply seeking professional advice.
A great book that makes this all possible is Tom Wheel Wrights Tax Free Wealth.
I just finished the book last week. It’s a simple read, straight to the point, and will blow your mind on the many ways taxes can be use to increase your income.
In this book there are several things you will learn:
1) You’ll learn how to reduce your taxes while increasing your income
2) You’ll learn how to leverage taxes to your advantages
3) You’ll learn why the tax code was created to serve investors and business owners not employees
4) You’ll learn how to get hold of your financial future
Below are interesting points I thought are worth mentioning from this book.
Each point played a major role in history and definitely shouldn’t be ignored.
Who Do You Work For?
In 1943 the U.S government passed the Current Tax Payment Act. This introduces income tax withholding’s from employees, which gave governments power to take half of employee’s paychecks.
The employee only received his or her net pay, the amount left after all taxes got withheld.
The rest went to the government, stripping employees on what they earned.
Translation- After this law was passed, anyone who works for earn income works for the government.
The more money you make the more you pay in taxes, this is why you don’t want to be an employee all your life.
Then in 1986, the government passed The Tax Reform Act of 1986, which took tax shelters and deductions from high paid employees such as doctors and lawyers.
As a result the stock market crashed, wealth switch hands, and employees were left holding the bag.
With employees unable to right off losses, a ripple effect took place spreading and collapsing financial markets.
History Repeats
Today, a wealth transfer is taking place and people can’t see it.
Millions who borrowed thousands to purchase a house (liability) are losing it to the very rich who sold it to them.
The Tax Reform Act of 1986 was intended for a purpose, just as today’s recession.
What’s happening in global markets today is more than a financial crisis, its a fight for wealth and power.
Different taxes for different people
When you look at the cash flow quadrant you can see the difference between us all. You can also see why people struggle majority of their lives.
“E” Stands for Employee (Highest people tax)
“S” Stands for Self Employed (Second highest tax)
“I” Stands for Investor (pay less in taxes)
“B” Stands for Business owner (pay less in taxes or no taxes at all)
When you view it from a productive stand point you can see who is more leveraged.
The reason the tax laws favors entrepreneurs and investors is because they do what the government wants done.
In return they’re rewarded for it which is the side you want to be on.
If you want to earn more money, it is imperative that you switch quadrants. You need to move from the “E”and “S” side to the” B” and “I”. The quickest way to do this is to take control of you’re taxes.
Three Incomes that makes up the World of Money
As I stated before there are three incomes that make up the world money.
1) Earn income: Income from your job which comes from your labor (Highest taxed income)
2) Portfolio income: Income from paper asset such as stocks, bonds and CD (Second highest tax income)
3) Passive income: Income from a Business, Rental property or Royalties (Least tax income at times zero taxed with good tax strategy)
Each income has its own set of rules and each income requires hard work. The question is, what income do you work for?
As always please leave your feedback below. Your feedback is always appreciated.
To order Tax Free Wealth click here.
Manny
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