One of the rules of wealth creation is to pay as little in taxes as legally possible.
Believe it or not, but there was a time in history when there were no taxes.
No income tax, no state or local taxes, no sales taxes at all.
The US government’s role was to create an environment so that citizens could take care of themselves.
At first, taxes were imposed on people in times of war.
When the Civil War broke out in 1861, the income tax was officially born.
The tax was 3% on all citizens who earned more than $800 a year, which would be $24,000 a year today.
That wasn’t enough to fund the war, so sales tax on feathers, gunpowder, and whiskey were born.
Governments fell in love with the idea and made it permanent.
Taxes are not necessarily a bad thing.
Taxes are capital given to the government to run and organize the country, a state, or a city.
It becomes a bad thing when those in government have selfish interests.
Taxes can become overbearing for the people.
Some believe that governments can afford to stop collecting taxes.
The idea is that governments own all the natural resources discovered in a country.
And they can develop income-generating industries.
But most countries can’t stop collecting taxes because of their control on monetary policy.
Taxes have also been a tool to fool naive people.
When governments want to raise taxes, they always begin by saying that the tax will impact the rich.
Nobody ever admits that it is the poor and working-class that will eventually pay for higher taxes on the rich.
So when this “tax the rich” idea is sold to people, they support it.
But when the legislation is being drafted, the rich use their connections to include loopholes.
This is how billionaires avoid paying taxes on their massive wealth.
Then a year or two after the law is passed, the government discovers that rich people dodged the legislation and that it no longer brings in tax revenue.
Therefore, they extend it to regular workers.
The problem is that regular workers cannot dodge paying taxes like the rich.
And thus, they become the perpetual taxpayers.
The rich don’t pay taxes.
And the reason is that they can afford not to.
Every attempt by any government to tax the rich always ends up throwing the working-class under the bus.
Not paying taxes is a matter of negotiation.
Do the rich need the government, or the government needs the rich?
The government needs the rich.
The rich don’t need the government.
The rich have other options because there are other countries.
But a government that frustrates the rich will descend into the abyss with time.
Here are 7 reasons why billionaires don’t pay taxes:
1. Billionaires Don’t Get Paid a salary that can be taxed.
Regular working-class people get paid earned income.
Billionaires don’t get paid anything like that.
Whenever you hear things like income taxes, just know that it is not touching the mega-rich.
Check Warren Buffet’s salary.
Then Check the salary of Larry Ellison.
Then check that of Jeff Bezos.
They run public companies, so their salary information is public.
Just check Google to find their salaries.
Larry Ellison’s basic salary is $1.
How can that be taxed?
Regular people, like yourself, have an income.
Billionaires can afford to make their salary as low as they want to because they really don’t need a paycheck.
So, income tax never gets to the rich.
Their income is always some modest amount.
Super wealthy people in the spotlight often have some amount of income just to pay taxes (to attract goodwill).
But the unknown billionaires are not under such pressure.
Many of them have zero salaries.
Suppose the government decides to raise income taxes to 75%.
In that case, that will not affect a billionaire who pays himself almost no income.
2. Billionaires Keep their Money in the system.
When you have $1 billion, the government would rather that you keep that money in the economy and not take about $250 million in taxes from you.
There are less than 3,000 billionaires worldwide.