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Bureaucrats, Taxes and Income

07th March 2011
By mathewowens in Taxes
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As we all have come to be aware, taxes are our single largest expense in our lives. Our hard earned tax dollars go to bureaucrats that find many creative ways to spend it as well as many creative ways to continue taxing us. However, the really rich find different ways to not pay these taxes by structuring their income sources in various ways.

W-2 wage earners are the people that pay the most in tax because of the type of income they make and because 99% of them do not do proper tax planning to mitigate some of the tax they pay. Getting financially educated on how to structure your income into income sources that reduce the amount of tax you pay is crucial to your financial success, especially when most pay 50%+ in taxes in one way or another. We are already taxed on our income, homes, investments, gasoline, travel, clothing, meals, alcohol, cigarettes, businesses, education, licenses, death, and on and on. You get the picture.

The bureaucrats say that these taxes are good for us and some of them are however they just keep finding additional ways to increase our taxes. The problem with the entire system is that the bureaucrats do not solve our financial problems or even know how to for that matter. They only throw money at the problem and never solve it making the problems bigger and bigger until we have a financial disaster on our hands like Social Security and Medicare. As the problems get bigger we pay more tax to make up for the problems that were never solved. These bureaucrats continue to tax us and take money out of our pockets legally.

Our job is to find creative ways to pay less of a percentage in tax legally. Unfortunately, you have to have a high financial IQ in order to find these creative ways of structuring your income and deductions and most of the low income taxpayers do not have a high financial IQ. Therefore, the low income taxpayers pay the highest percentage of tax relative to their income.

In order to actually keep most of your money instead of paying taxes, your income needs to be structured so that it is portfolio income or passive investment incomes which are at lower tax rates. Earned income, such as those that have W-2 jobs has the highest tax rates with the least amount of deductions. The structure is flawed from the start. As taxes rise to cover the major financial problems currently facing our nation because of the problems the bureaucrats created, the trick to real wealth and not becoming part of the middle class (i.e. the new poor) is to change your income sources and finding creative ways to reduce your tax. This all starts with financial education.

Financial education is lacking significantly in our society as a whole and is not taught in schools. Most teachers live in the W-2 world and are not financially educated so how are they going to educate America’s children. That means it is on the parents shoulders to not only educate themselves financially but take the reins and educate their children as well. You can make $2,000 per month or $30,000 per month, but without financial education neither is going to get you very far in your accumulation of real wealth without being financially educated.

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