Nobody likes to pay taxes, least of all the wealthy. Today we're going to talk about five ways you can save on your tax bill and keep more of your hard earned money.
Why do the 1% pay the least in taxes?
The tax code in the United States is a system designed to incentivize economic behaviors that benefit our country as a whole. So, yes, while percentage wise the 1% pay the least in taxes, dollar-wise they are the bulk of the tax revenue.
The reason why the affluent pay LESS taxes, is because those with money, they have more discretion with their income than those who struggle to make ends meet and are living paycheck to paycheck.
When someone has extra money, they have a choice in how they earn it. It's widely known among the wealthy that earning a paycheck is the most expensive and least efficient way to make money, as it is taxed at the highest rate and requires the most physical labor.
See, the tax code is designed to encourage individuals to invest in our economy by starting businesses that hire others, building and selling products to other countries, and transferring wealth from other nations into the US economy. This movement of money stimulates growth in the industries and sectors that congress wants to develop.
So why do the top 1% pay the least amount in taxes?
Simply put, they use the tax code to their advantage by earning their money in the most tax-efficient ways possible and spending it in areas where the country wants to see growth. The tax code is an integral part of the US economic engine, facilitating the transfer of wealth and supporting the growth of the country.
So, while the tax code may seem unfair to some, it is designed to incentivize behavior that is beneficial to the US economy and encourage the transfer of wealth. The top 1% are able to take advantage of this system to their advantage, paying the least amount in taxes while contributing to the growth of the country.
Taxes are a Treasure Map to Wealth!
This is where Elon Musk, the CEO of Tesla, comes in. For the year 2020, Tesla made 5 billion from selling cars and 50 billion from selling tax credits, a significant portion of their revenue. The rich go into industries that offer tax incentives, such as green energy and real estate because they are tax advantageous. They also give to charity as it is incentivized in the tax code.
The tax code is like a treasure map that changes every few years according to what Congress wants. The 1% understand that taxes are a game and look to the treasure map to minimize their tax liabilities. Investors and individuals should also look to the treasure map and make decisions on how to accumulate wealth and turn it into income in the most tax-efficient way. Failing to do so would mean that Congress will make the decision for them, and the decision will not be in their best interest.
The Wealthy Avoid Taxes By Being Active Participants!
So, the reason why the 1% pay less in taxes is that they actively participate in the tax code, deciding how they earn money and how they pay taxes. Everyone has the ability to do the same, given that their necessities are met.
For The Rest of Us, There's The Tax Efficiency Ladder...
So for the rest of us, those of us who don't have businesses and can't be masters of industries, there are still things we can do to reduce our taxes. One of my favorite ways of explaining this is by using the analogy of a ladder. we'll take a closer look at how to think of taxes as a ladder and the different rungs of this ladder.
At the bottom rung of the ladder, you have the least tax-efficient money, which is your wages. They don't do much for the economy and you pay the highest amount of taxes on them. This is why it's essential to find ways to increase your retirement income that are more tax-efficient.
The next rung on the ladder is tax-deferred money, such as your retirement accounts. Here, you don't pay taxes on the money immediately, but you get an immediate tax break, which reduces your taxable in