Blog | Personal Finance

How to Legally Not Pay Taxes

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How many of you pay taxes? And how many of you would prefer not to pay taxes?

How many of you know somebody who cheats on their taxes so they do not pay taxes? You do not have to cheat to avoid paying taxes.

For the last 35 years, I have dedicated my life to learning and studying tax law. I have a master's of tax degree from the University of Texas at Austin. I developed and taught courses to thousands of CPAs and accountants.

When I was in the national tax department of Ernst and Young, I taught hundreds of students as a professor at Arizona State University. For the last 25 years as founder and CEO of ProVision, I have taught thousands of entrepreneurs and investors like yourself around the world how to permanently reduce your taxes.

Remember, there are four ways you can earn money:

  • You can go to school, get a job and earn it as an employee.

  • You can go to school even more, become a doctor, a lawyer, an accountant, a specialist or a small entrepreneur

  • You can be a big business owner

  • You can earn it as a professional investor, a true entrepreneur

It does not matter if you are in Santiago, Chile, Sydney, Australia, Johannesburg, South Africa or San Francisco, California. The tax rates are approximately the same depending on how you earn your money.

On average, employees are going to pay about 40 per cent in taxes. If you are a specialist or small entrepreneur, you are going to pay even a higher tax rate, 60 percent on average.

As a big business owner, the big entrepreneur, you can reduce your tax rate to 20 per cent but here is the magic. If you can become a professional investor, a true entrepreneur, you can reduce your tax rates to zero.

Here are a couple of high-profile people

Donald Trump has paid nothing in federal taxes. The only years of tax returns anybody has ever seen were from a couple of years when he had to turn them over to state authorities to get a casino license. They showed he did not pay any federal income tax.

In fact, it would absolutely shock me if Trump paid any taxes. He would have to have the worst tax advisers on the planet to pay any taxes. Why in the world would you want to stay small when you can pay lower taxes and make even more money.

This is Hillary Clinton. I am not for Trump or Clinton, I am just telling you Hillary, as an attorney, is in the 60-percent tax bracket. That is all she has ever known.

This is Barack Obama. He said he paid 30 per cent tax, which was low for an employee, but Obama has only worked as an employee.

There is a reason that people do not want to go into big business or investing and it is a single four letter word -- fear. They are scared to death of an audit.

I guarantee Trump's business gets audited every single year by two different organizations: financial auditors and tax authorities. Meanwhile employees and small business owners may be scared to death of one audit because they are cheating or because they are not used to it.

In big business or investing, you do not have a financial statement. You live off an income statement. You do not have to have a balance sheet, a statement of cash flows and all these other financial statements, so these people love an audit. It is like going for a checkup with the dentist or the doctor to know where you are.

With the right team around you and with the right instruction, such as the lessons in Tax Free Wealth, you do not have to be afraid of this.

The real purpose of the tax law in your country is to provide incentives to business owners and investors. The law would be three pages long if it were not for that. Instead, it has thousands of pages to give these incentives to business owners and investors.

Sit back, learn and do not be afraid of making mistakes.

If you do it legally, then the government is more than willing to be your partner. It will contribute up to 40 percent for every investment you make, whether it is real estate, energy or business.

The government wants you to create employment so you partner with them to create employment. When you do that, the government gives you tax benefits.

Maybe the government wants you to build real estate, such as commercial properties or residential properties, so they give you huge tax benefits. We call it appreciation or cost recovery.

The government gives you tax breaks for using debt for your real estate and for your business. For the rest of you, the government does not give any tax breaks for debt only. But the government wants big business and investors to succeed.

Tax laws are set up to help you become wealthier, but you must do what the government wants you to do. When you do, you make more money, you pay less in taxes and you never lose sleep at night.

Original publish date: July 15, 2020

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