Chapter by chapter book review: Rich Dad Poor Dad, chapter 5 lesson 4: The history of Taxes and the Power of Corporations
Death and taxes? Maybe it could only be death...
Whereas the previous chapter wasn't great, I liked this one. It was less usefull from a practical viewpoint, because it's quite centred on the US tax system, but the general idea and the general rule is valid.
It starts out by describing how originally there where no taxes. Taxes where something which was levied if there was a necessity, like a war, but not systematically. It than describes how America was in part founded on a resistance to taxes (Boston Tea Party,...)
Only very late in history, as in early 20th century, did income tax get invented. And at that time, it was introduced just on the rich. It was sold to the population as a means of punishing the rich, and as soon as it existed, it was gradually expanded until the entire population was paying them.
In the meantime, the rich created loopholes which allowed them to avoid these taxes, completely defeating the original reason why these taxes got sold to the population.
The typical middle class aspirations are to have a good job, and earn money. And these are the people who pay tons of taxes, more income -> more taxes.
And than the chapter continues to describe how corporations can be used in order to shelter your income from taxes. How a number of expenses can be paid from pre-tax income, how earnings from deals can be put into new deals without paying tax until after the next deal (when you will repeat the process).
As I said, this second part of the chapter is less interesting, because I am not an American. The general system however, is probably transferable to any tax system world wide, and I have already made the first small inquiry regarding my national tax code, hoping to find some way to use a corporation to be paying less tax.
Again, a chapter which gets you thinking, and which is worth reading, even if only to realise that taxes are not as obvious as we think them to be.
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