A lot of people tell me that avoiding paying taxes is somehow “Un-American”. What if told you that paying taxes is the most unpatriotic thing you can do? Most people get mad at me for even suggesting this. The government needs your money to move and work. If you do not put your money to work, the government will take it from you in the form of taxes and put it to work. So, who thinks the federal government spends tax payers money in the best, most efficient way possible? No one does. “All individual income tax revenues are gone before one nickle is spent on the services that taxpayers expect from their government” – Grace Commission 1984 (Executive Order 12369)
Taxes are designed to incentivize people to put their money to work where the government wants it to be used, and penalize people if they don’t. A great example of this is Georgia and the movie industry. Georgia needed more revenue in the state, so they offered the movie industry big tax incentives to film in Georgia. This has employed thousands directly and indirectly. It has also brought billions of dollars into the state ($9.5 billion as of 2017). The Oil and Gas industry is another example. After 9/11 the US federal government decided that as a nation we were too dependent on oil and gas from countries that hate us. So the government gives massive tax incentives (up to 100%) to investors if they invest in domestic oil and gas. Real Estate is another good example. The government cannot build, or repair houses so they give investors tax incentives to build, maintain and own real estate (you use a tax write-off with your own home). The government can not afford taking financial care of the elderly (medicare and medicaid is bankrupt) so they give people incentives to invest in Insurance (long term care, health and life) to be used when they are elderly. You can get tax incentives for any number of investments if you know where and how to find them. “In America, there are two tax systems: one for the informed and one for the uninformed. Both are legal.” – Supreme Court Justice Learned Hand.
Hopefully by the time we are finished you will be on your way to being in the “informed” group. The strength of every country’s currency is how the money flows and is circulated. Money MUST have a job. Stagnant money does no one any good. Hoarding your money in a bank account (or under the mattress) does not help the economy or our country. The best thing you can do is give your money a job. Find a tax advantaged investment that fits your goals, lifestyle and risk threshold and dedicate all non-working dollars toward that investment or investments. Some argue that they MUST have a minimum of 3 months expenses saved in a bank account for their emergency fund. Having a well funded emergency fund is crucial for a sound financial plan however, if your emergency fund is sitting in a bank account it does not have a job. Your money may be earning 1% if you are lucky and inflation is growing 4% on average. That means your emergency fund is actually costing you 3%. What if you could find a way to put your money to work for you and still be accessible in case of an emergency? An ACTIVE money manager can liquidate your investments within 48 hours if needed, but still working for you if you don’t. The wealthy are taught from an early age how to put money to work for them, how to use the tax code to take advantage of every incentive available and how to strategically spend their money instead of wasting on fleeting desires. These concepts are not taught in school. They are only taught generationally or to those willing to search for the knowledge.
B.Sadler, Financial Life Guards