How The Richest People In The World Pay ZERO Taxes

Why Pay Taxes When You Don’t Have To?

There is a whole world of tax loopholes and strategies that have allowed the rich to legally shield their wealth from heavy taxation.

And most of these loopholes are highly counter intuitive, such as accumulating debt on purpose in order to avoid taxes.

It may sound weird, but that’s only because most people believe that debt is bad, they have to work to make income, and then pay tax on that income.

When in reality, that’s the biggest trap in all of human history.

What the rich do is they transform their money into cash generating assets (such as real estate), avoiding income tax and making more money without working long hours.

And luckily, these methods are not exclusive to the ultra wealthy. They can be applied by anyone willing to learn and invest wisely. Most people just don’t know they can do this.

Here’s how leveraging debt, investing in real estate, and understanding the tax code can transform your financial future, just as they have for some of the most financially successful individuals in the world.

Key Financial Concepts from "Rich Dad Poor Dad"

The unofficial guidebook on wealth generation, Rich Dad Poor Dad by Robert Kiyosaki pretty much sums up how the rich keep more of their money than the poor.

One of the central teachings of Robert Kiyosaki's "Rich Dad Poor Dad" is the distinction between working for money and having your money work for you.

And the first lesson he teaches is how to stop thinking about money like everyone else does.

He explains that we are all trained to believe that working for money is the only way to prosper, how debt is a bad thing, and how everyone needs to pay their fair share in taxes.

However, all of these things are lies.

Contrary to common belief, not all debt is bad.

Kiyosaki emphasizes the concept of using "good debt" as a tool to create wealth.

Good debt refers to borrowing funds to invest in assets that generate income or increase in value over time, such as real estate or businesses.

These investments can provide cash flow and tax advantages, particularly through interest deductions and depreciation, which can significantly reduce the amount of taxable income.

For example, Robert explains how someone could work a year to make $100,000 and get taxed 24% of that income, losing them $24,000 in taxes each year.

Or, that same person can take out a loan for $100,000 and pay an interest rate as low as 7% on that money.

So which looks better, working an entire year and paying 24% in taxes, or acquiring debt and only paying 7% in interest and 0% in taxes?

But what about the tax brackets? Don’t the highest earning people pay more and more than the lowest earning people?

Yes, they’re supposed to. But remember, the government can only tax your taxable income.

So the super rich make it look like they have practically ZERO taxable income.

And they do this by transforming their money into assets.

Real Estate and Tax Benefits

Real estate investment is often a cornerstone of wealth building strategies advocated in Rich Dad Poor Dad.

This is for 2 reasons: it provides potential for capital appreciation and offers substantial tax deductions. 

It’s like a one-two punch to make you rich and keep you rich.

And one of the most powerful tools in the whole equation is depreciation.

This accounting method allows you to reduce the reported net income from your properties, reflecting their wear and tear over time, thus lowering your tax bill.

Even if a property appreciates in value and brings in positive cash flow, depreciation can make it appear on paper as though you are making less money or even incurring a loss, which shields your income from taxes.

How crazy is that?

So basically, these rich guys go to the government and say,

“Hi Uncle Sam, even though my chain of hotels is increasing in value and cash flow, the buildings are depreciating so I can’t pay you any taxes, sorry!”

Essentially, the rich work WAY less, earn WAY more, and keep WAY more of their money using this strategy.

Here’s Robert explaining it:

The Biggest Names Pay The Smallest Taxes

Prominent figures like Warren Buffett and Jeff Bezos have famously utilized these strategies to minimize their tax liabilities.

Buffett, for instance, has often discussed how his secretary pays a higher rate of tax than he does, not because of evasion but due to his income being derived primarily from dividends and capital gains, which are taxed at a lower rate than income from wages.

Other huge names in the wealth world like Grant Cardone also avoid taxes and keep more of their money than the middle and lower class.

Here’s Grant explaining how he avoids paying taxes (legally):

@grantcardone

Did You Already Know About The “1031 Exchange”? #realestatehacks #taxloopholes #realestateinvesting #grantcardone #propertytax

Actionable Steps for Beginners

There’s probably one common thought going through your head as you read this:

“I can’t use these strategies unless I’m a rich real estate tycoon or millionaire”

While already having money certainly helps you purchase real estate or make capital gains, you can still get on this track without it.

You just need to get your mindset in the right place and start planning for your financial future.

Start by educating yourself. Begin by reading books and taking courses on real estate investing. "Rich Dad Poor Dad" by Robert Kiyosaki is an excellent starting point.

Then, save for a down payment on your first asset.

Accumulate savings to make a down payment on a rental property. Even a small property can provide significant tax benefits. Section 8 investing is a popular strategy right now for beginner investors.

The BMM Takeaway

Capitalism, the government, the tax brackets…it’s all just a game.

And with the right strategy you can BEAT this game.

Just look at the richest people in the world. They all beat the game. And so can you.

You’ve just been taught your entire life that you’re supposed to work long hours and make just enough money to get by.

But in reality you have the power to make money work for YOU instead.

This article may have revealed the tip of the iceberg, but now it’s up to you to actually research and educate yourself further.

Don’t just try to buy real estate and jump into it with no experience. That’s how you LOSE all your money.

Do your research and do it right over time. The most important thing is that you’re now aware of the system and that you have the power to rig it.