nine months I doubled my business. That’s right—I went from two to four clients. That wasn’t going to pay the bills. Then one day a friend of mine, also a CPA, called me to tell me that there was an accounting firm for sale located not far from me. It turned out that I knew the CPA who was selling the firm.
The only challenge was that not only did I have no money, I was $40,000 in debt. I asked my friend for advice and he offered to lend me some of the money. The seller agreed to finance about 50% of the sales price and my parents loaned me the rest of the money. My first no-money down deal. Within a year, I was so busy I had to add a partner.
About five years later, I met Robert Kiyosaki and began studying money and business under his tutelage. I learned a completely different way to look at money and business—and education. I’d never seen teaching like Robert’s before I met him and started attending his conferences.
Here I am now, writing a book in the Rich Dad Advisor series. Without Robert, I would never have written this book. In fact, I couldn’t have written this book. Much of the big-picture thought process about taxes and wealth contained in this book comes from my many meetings and seminars with him.
When Robert first approached me about writing this book, he told me that it had to be about how entrepreneurs and investors could reduce their taxes. And it had to be international in scope. I did some checking in the bookstores and libraries and I couldn’t find a single book on taxes with an international perspective. This presented a great challenge to me.
How could I write a book on taxes that applied to every entrepreneur and investor in every country? I know the U.S. tax law very well. I’ve been studying it for 35 years. But like everyone else, I thought that the tax laws of other countries would be quite different than the U.S. laws.
My research revealed something entirely different. It turns out that the tax laws in all developed countries are similar. They are so similar, in fact, that a book could be written that applies to entrepreneurs and investors around the world. This is that book.
To be sure, the details of the tax laws are different in each country. And we will look at specific tax strategies you can use in your country at the end of each chapter. But unless you are a tax professional, you, the entrepreneur and/or investor, don’t need to know all of the details. You can leave those to your tax advisor. You have to know the concepts. And the concepts are the same regardless of your country of origin or the country in which you do business.
This book is about tax planning concepts. It’s about how to use your country’s tax laws to your benefit. In this book, I tell you how the tax laws work. And how they are designed to reduce your taxes, not to increase your taxes. Once you understand this basic principle, you no longer have to be afraid of the tax laws. They are there to help you and your business, not to hinder you.
Once you understand the basic principles of tax reduction, you can begin immediately reducing your taxes. Eventually, you may even be able to legally eliminate your income taxes and drastically reduce your other taxes. Once you do that, you can live a life of tax-free wealth.
So let’s get started.
How the Tax Law Can Be Your Best Friend
Taxes are Stealing Your Money, Your Time, and Your Future
“Taxes are your largest single expense.”
– Robert Kiyosaki
Every day, taxes are stealing your life away. Income tax, sales tax, value-added tax, employment tax, and a host of other taxes are eating away at your life.
You may think they are just taking your money. If only this was all they were taking. Taxes don’t just take your money—they steal your time—because money is time. People with lots of money have lots of time because they don’t have to spend their life trading their time for money. Instead, they can trade their money for time.
Taxes don’t just take your money—they steal your time—because money is time.
The average person in a developed country spends 25 to 35 percent of their life working to pay taxes. That means more than two hours of every workday are dedicated to feeding your government. And three to four months out of every year are spent working solely so that you can pay your taxes. That adds up to over 13 years in your work life and 20 years in your lifetime—20 years. That’s a prison sentence.
And it’s not going to get better anytime soon. As inflation eats away at the spending power of our currency, it also puts us into higher tax brackets. So we end up with even less purchasing power because a higher percentage of our income is taxed. And with the increase in the number of entitlement programs in every country, there is a higher demand for tax revenues to support them. The United States alone has over $80 trillion of unfunded social liabilities in the form of Medicare and Social Security promises to its aging population. And this number grows every day as new entitlement programs are enacted.
It hasn’t always been this way. In the early years of the income tax, only the very rich were subject to the tax. It was believed that since the rich had more income than they needed in order to live comfortably, they could afford to pay some of this back to the government. And because they had earned this income under the protection of their government, certainly it was fair that, in time of war, they could pay back the government some of their excess in order to maintain their freedoms and the protection afforded by the government.
This all changed after World War II. The governments of the world found that the income tax was a useful revenue-raising tool that could be used to rebuild an economy that was ravished by war. So the governments began taxing the middle class. At first, it was only the excess earned by employees over the average cost of living that was taxed. The government provided exemptions for the first income earned so that the average person could live on their regular earnings and only pay tax on the excess that would otherwise go to investments.
As they watched the behavior of the people who were now paying income tax, the government began to tinker with the tax law to see how it would affect the activities of the taxpayers. What they found was that a minor change to the tax law could have a profound effect on the behavior of the people. If the government gave a tax incentive to invest in business, more people would invest in business. If they gave a tax benefit to those who invested in oil and gas, more people would invest in oil and gas.
And so the tax law grew from a simple revenue-raising vehicle to a vast array of laws that governed the economic activity of the land. And so it is today that the tax laws of every country are modified as the economy changes and as social policies change.
You may think that you have no choice about how much tax you pay. Everyone has to pay taxes, right? Wrong. There are millions of people who legally pay little or no tax. What’s their secret? Do they know about loopholes that are in the law that allow them to get away with not paying tax? No. They simply understand how the tax law works. They understand that the tax law is not something the government uses
