It is soon to be celebration time all across the U.S. Our Independence Day, our birthday is on the horizon. It is summer, Veterans day and Memorial Day and even the 4th of July make us all think about all of the sacrifices that were made to get us here. We are very, very thankful. Everyone should be. When celebrating most folks focus more about everything that happened in the Colonial period. The Revolutionary War was the gateway to our independence. The desire for independence was fought over many things but mainly about taxation. The Boston Tea Party and many parts of the revolution were spurred in part from being levied and taxed on every single thing that we did. The quote “taxation without representation is tyranny” was one of many that became quotable. Being taxed unfairly started us on the path of becoming independent.
This is the question we have been building to. Do you feel like you are being taxed unfairly? Many would just automatically say yes, but in actuality, it is largely up to you yourself, as to whether or not you’re overtaxed or undertaxed.
What do we mean? The beautiful thing about being an independent person in an independent country is the power of choice. You have the choice of being employed by someone else, or self-employed, or unemployed. You have the choice to store your capital and make investments that create income tax, like dividend paying stocks or certificates of deposit. But you also have the ability to use investments that don’t create tax, like tax-free municipal bonds, or growth stocks held and not sold. If you’re complaining in your head about taxation, you’ve got to get with the program. Your forefathers had to actually put their lives on the line to win you your freedom of choice. You simply need to educate yourself and exercise that freedom and without any fight at all you can create an environment where you pay little, or almost even no tax. I hear you saying, “hogwash”. “You’re just talking about cheating the government”. No we’re not. We see well executed tax plans for people that have $1M a year of income and do not have to pay much at all in federal and state income tax. How could that be the case? The assets and income are structured between return of principal for cashflows, long-term growth ladders on stocks, tax-free municipal bonds, and harvesting capital gains, which right now, in the bottom two tax brackets, are taxed at zero. Buying and leveraging real estate that they live in so they can sell their personal residence over and over again at a $500,000 profit every two years, none of which is taxable. Sounds like a lot of effort, right? Well, how much do you hate paying taxes? Not many people would live their lives to have millions of income and pay no taxes. We’re just saying it’s very possible and really not that complicated, but it does take effort.
What should you do before we celebrate our Independence Day! Make an effort.
- Effort number one: Understand that tax planning is different than figuring out what you owe in taxes after the fact.
- Desiring a lower tax bill.
- Taking action instead of hoping, wishing or complaining.
If our forefathers had simply sat in Boston drinking their highly taxed tea and complained about it, we’d all still be British subjects. But they did something about it, something quite dramatic. You don’t have to go to the lengths they did. Thank you, military. Thank you, people who serve. Instead, you just need to pick up a phone and call a tax planner for a first appointment!
The post Financial Fireworks and the 4th of July. appeared first on Tax What If Doctor.
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