i have some tax secrets i want to share with you today
but you have to promise not to tell anyone yeah okay come here
okay i was just playing earlier because these tax secrets i'm gonna share with you today are
actually very very important that you and other people all around the united states know about the
tax system let's go ahead and get into it with tax secret number one taxes hurt the middle class and
working class people the most now i know i know okay before we get all riled up okay the rich and
the wealthy actually pay the most money in taxes like the actual physical amount and outside of a
few billionaires like jeff bezos and elon musk or the top point zero zero zero one percent of people
the rich actually also have the highest effective tax rate as well just take a look at this
screenshot from the tax foundation okay as you can see the average tax rate of people in the top
one percent is 26.8 percent which is higher than the average tax rate of all taxpayers at 14.6
so then let's get back to the question of why do taxes hurt the middle class and the working
class families the most well it all comes down to building wealth and i'm gonna break this down as
easily and as clear as i possibly can with some graphics so a lot of energy went into this so if
you could do us a huge favor by just hitting the like button for the youtube algorithm so
other people like you can learn about these tax secrets did you do it okay thank you now
first understand that wealth and income work very differently for the top 10 percent of high income
earners than it does for the average american household so this circle represents about 1 000
of income and out of that 1 000 the average american household may pay something like
14.6 in taxes so we take out some income from that circle to dedicate to taxes and then after
that for many households the rest of their income goes into paying for their living expenses okay so
they pay for their mortgage they pay their bills they buy groceries they have to have some form of
entertainment etc so that makes their circle that was filled with income almost empty but
smart households tend to be able to save a little bit and invest whether it's in a 401k plan or
owning a home and that investment creates another small circle representing their wealth growth so
now we have three circles you have an empty circle that used to be filled with income but it's now
empty because the household had to pay taxes the household had to pay for their living expenses and
if the household was smart and able to then they were able to put some money into building wealth
okay now we're getting close to the tax secret if you look at the wealth circle and you look at the
tax circle you see for the average american household they are almost identical in size
meaning that the proportion of people paying taxes and building wealth almost cancel each other out
so that's the average american household now let's go ahead and look at what happens for the top
let's say one to ten percent of high income earners and how wealth building works so
this circle represents one thousand dollars of someone's income in the top one percent of income
earners and because they make more money their effective tax rate is also higher so we also will
take out a little bit more of their income to pay for taxes and then the rest of their income can
still go towards living expenses so we'll empty out that circle okay but here's the thing for the
top one percent net income doesn't really matter because they own assets that significantly grow
in value so they have this huge circle of wealth growth and this is like the ultimate
safety net right because if their income could no longer support their living expenses then
they could simply sell a portion of their wealth in their assets which is something that many
american households simply cannot do okay here's a screenshot of how jeff bezos the founder of amazon
wealth grew compared to the typical american household so for every 100 of wealth growth
over that period the typical american family paid 160 dollars in taxes meanwhile bezos paid only one
dollar and nine cents and this is because jeff bezos owned a huge asset which was amazon and
amazon quickly appreciated in value and he was able to pay himself a very small salary
you also hear about other uh high income earners doing the same thing like they pay themselves
a very small salary you hear stories like mark zuckerberg only paying himself one dollar a year
so that screenshot pretty much sums out how taxes significantly hurt middle class working families
in the wealth race okay let's move on to tax secret number two but really quick before i do
if you are new to our channel hey there i'm sean with life accounting accounting company that helps
you save on taxes and build more wealth and if that sounds good to you make sure you subscribe
to our channel so that you can grow with us all right tax secret number two businesses get the
best tax write-offs okay when you run a business you can write off almost anything using your card
for business write it off using a portion of your home for business write it off traveling
to the caribbean on business write it off hey sean look i can write off a sheet of paper
okay kind of like that but those are just some examples of some write-offs and that's just
scratching the surface i mean there are hundreds if not thousands of ways to write off business
expenses and i think it's rightfully so i mean i have a couple businesses and i know how hard it is
to invest and grow a business and having great tax write-offs and tax credits can definitely
help a business grow in the long term because with this you can actually start building faster wealth
right you can start building a valuable asset in a business that appreciates in value and while
that thing appreciates you can pay fewer taxes just like the rich do so yes start aside hustle
start up a business if you feel like you have the skill set for it because the risk is well worth
the reward but here's the thing okay majority of small business owners work in their business and
as a result they get hit with tax secret number three which is self-employment taxes so if you
actively work in your business and you're taking payments you're taking a salary you're taking
any type of money home then you can get hit with what is called self-employment taxes now
this can be a dangerous tax especially if you do not understand the tax system because now instead
of your business helping you grow and helping you to save on taxes it actually can compromise
your trajectory of building wealth because if you're not taking advantage of tax deductions tax
credits or selecting the right entities then now you're being hit with three different taxes right
you have federal taxes you have state taxes and now as a new business owner you have a
self-employment tax that's why it is so important to make sure you select the right entity and that
it is taxed the correct way which i'll link a video down below breaking down the differences
between a s corp and an llc so make sure you check that out after you watch this video but
at the highest level your goal as a business owner should be to turn your business your active income
into a passive income business investment this means that basically your business can run
without you it can produce positive cash flow without you and it can provide passive income
to you which allows you to completely avoid the self-employment taxes and likely put you
on a faster trajectory toward building wealth all right and this is exactly what the rich do
all right moving on to tax secret number four investors hack the game with depreciation okay
what does this mean basically as an investor you can take advantage of one of the best
tax deductions at least in my opinion which is depreciation okay depreciation basically
allows you to take a loss on the value of a declining asset even if that asset produces
positive cash flow so basically you're making money but you're saving on taxes for example i
did a video on how nba and nfl owners basically get a huge tax deduction because they're able to
take depreciation on their franchise teams like that's crazy to me these nba and nfl teams make
millions and millions of dollars every year and yet the owners of the team are able to take a loss
through depreciation by owning that team and of course you can also take advantage of depreciation
in real estate by owning rental property or you can take advantage of depreciation if you have
a business and you're buying equipment or you're buying a car or something like that okay the point
is depreciation is like a hack to people who own real asset investments so what does all this mean
okay well at the end of the day you have to master wealth growth and that may involve
mastering your income mastering your taxes investing and much more which is what we
talk about on this channel all the time now we have two more videos coming up next that
will teach you more about how to save on taxes and build wealth and we'll see you over there