4. Do what the government WANTS you to do
"The tax code is a series of incentives for business owners and investors, a roadmap to wealth." ~Tom Wheelwright
If you buy drinks at Starbucks every morning and put it on your credit card and pay only the minimum payment and rack up hundreds of dollars in interest What does that tell you? The government WANTS you to look at homeownership and thus gives you a tax credit (carrot vs stick)
The four main things that usually give you the best tax treatments are Energy, Jobs, Food and Housing.
Let’s face it, our economy runs on energy be it natural gas, oil, petroleum, solar, wind, nuclear or geothermal. So the government offers tax incentives to provide energy sources. Just ask Elon Musk as he has had millions if not billions of tax incentives to build his factories.
We all need jobs or at least a source of income to sustain us. And as an employee, we pay the highest taxes (earned income from HOW YOU ARE TAXED). So the government offers tax incentives to provide jobs.
We all need food, that is a basic need. So there are tax incentives available for food production, even down to research and development costs.
And we all need a roof over our heads, regardless of what the economy is doing. Real estate, especially residential is quite possibly the most tax favored business and investment one can offer. With generous write offs, especially with depreciation, one can earn rental income (taxed at the lowest rate and EXEMPT from FICA taxes) while claiming a loss on paper, leading to TAX FREE INCOME!
In closing, your combined total tax liability will always be your largest expense throughout your life. Obviously, everyone’s tax situation is different, the tax code is constantly changing and it is impossible to simplify every single tax code savings vehicle into this website. But I will continue to touch base of various tax topics in my blog, my newsletter and my LinkedIn articles.
With that, I will leave you with these closing words from our 30th President:
"The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny." ~Calvin Coolidge
*Full disclosure I am NOT a CPA nor a certified financial advisor (or any other alphabet soup designation) and all of the information in this section is provided solely for educational purposes and does NOT constitute legal or tax advice. EVERYONE should consult their own financial advisors, CPAs and tax strategists to compile their own individualized plans.*