What You Don’t Understand About Reducing Your Taxes

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What You Don’t Understand About Reducing Your Taxes

Is paying taxes your favorite thing? Don’t you just love paying taxes to an incompetent and corrupt government that takes the vast majority of your tax money and blows it on idiocy? Let’s talk about some techniques that may save you 50%, or more, on your taxes.

Your Biggest Expense 

What is the single biggest expense over the course of your entire lifetime, from the ages of 18-79? Some might say it’s housing, rent, raising kids, or college for their kids. Well, if you live in the Western world today, none of these are your biggest expense. Your biggest expense, by far and wide, is taxes. This means taxes you pay directly to the government that you may, or may not, realize you’re paying.  

I used to live in the state of Oregon, which is one of the highest income tax states in the United States. Eventually I got tired of paying a 10% state income tax for no reason and I packed up and moved 20 minutes north across the border. I relocated to the state of Washington, which doesn’t have an income tax, and my income went up. Just by making this little move, I was earning 14% more and paying no income taxes. I didn’t have to pay attorneys or accountants to prepare a state income tax return. I only had to prepare a pay a federal return, so I saved a bunch of money on legal, bookkeeping and accounting costs. 

Common Misconceptions  

Many of you think that if you live in a free country, like the United States, you don’t pay a lot of money in taxes. For years I was saying, and I keep saying, that America is amongst the highest taxed countries and Americans are amongst the highest taxed people in the world. This also applies to the whole history of the world. I’ve had so many guys disagree with me and say “We’re Americans. We don’t pay a lot of money in taxes.” There are so many taxes you don’t even realize you’re paying as Americans.  

Whenever you pay your cell phone bill, there are taxes embedded in there. When you put gas in your car, there is something like 40%-60% that doesn’t apply to gas, they are just taxes. You’re not realizing this because they don’t break this out on your receipt. When you pay your electric bill, a good chunk of that is taxes. They hide all these corporate taxes that you don’t see. The typical American pays anywhere from 51% to 70% of his income in some sort of tax that goes to your corrupt and collapsing government. Wouldn’t you rather keep that cash?  

Another View 

There’s another aspect of this, which is context. If you have never made more than $20,000 a year in your entire life, then the issue of taxes is not really a big deal to you. Back in the olden days, before I established systems to avoid this, I wrote some big checks to the IRS for $50,000 to $67,000. I used to think to myself, “What is the good I could have done with this money? What is the amount of money I could have put away in my investments or for my retirement instead of giving it to a wasteful government? What could I have done for my family instead of giving it to Trump, Obama or Biden?” You spend this money and then see that Trump has spent $120 million bombing Syria or you read in the news that Obama just bailed out another big Pharma company with taxpayer money. It changes your perspective on this.  

It’s Your Problem Too! 

If you’ve never gone through anything like this, then you probably think that taxes are a rich person’s problem. No, it’s not, because the typical Westerner is paying 51% to 70% of their total income in taxes. I don’t know how much money you make per year, but I suggest you pull out a calculator and plug in how much you think you make per year and subtract 50% of that to see how much money you’re sending the government.  

Ask yourself what you could do with your life if you kept that money and were able to use it to buy a better house, invest, start a business, or help your kids. I suggest you go through this exercise and realize how much money you’re paying. This is the problem in terms of western collapse. Most westerners think, incorrectly, that they’re not paying much money in taxes.  

Where is Your Money Going? 

When any western leader blows hundreds of millions, if not trillions, of your taxpayer dollars, it doesn’t really bother you as much, when it should. Most western governments, including the United States, Canada, Europe, and Australia, would be much smaller and more conducive to personal freedom if the people in these countries realize how much money they’re sending, every month, to their failing governments. It’s a matter of context and a matter of recognizing how much money you’re wasting in taxes.  

The Legal Minimum 

I did a bunch of things to make sure I was paying the legal minimum in taxes. I don’t dodge taxes or break the law. As a matter of fact, I will have one tax return double checked by secondary accountants or attorneys to review the taxes and make sure I’m not breaking any laws or doing anything wrong. I sometimes talk about reducing your taxes to legal minimums publicly, so I have to set the example. I have made a six-figure income for most of my adult life and, while most westerners are paying 51% to 70% of their total income in taxes, I have been paying between 7% and 8% legally.  

My income has grown in the last few years and my taxes have gone up to about 13% to 15%, but that’s still a fraction of what the typical American is paying. My objective has always been to reduce my legal amount of taxes to 4% or less and I’ll probably hit that goal for 2021. Even if I’m a little off and it’s 5% or 6%, I’ll take it.  

Getting The Information You Need 

If you want more information on how to get your tax rate this low, legally, you should join our Six-Figure Warrior Mastermind. This is a program where you and I work together for an entire year, one on one, and in small groups. You will get all my books and courses for free. The link is www.alphafocusprogram.com. Enrollment is only open between October and December, so if you want to join, now is the time.  

Where Taxes Should Go 

Notice I said 4% or less, not zero. I am not an anarchist, I’m a libertarian. I think some government is OK, so I don’t mind paying some money in taxes. I’ve analyzed, in the past, that if you have a constitutional small country, all you need is a 3% to 4% sales tax that covers all the constitutional duties of government. That’s all the taxes you need. I am perfectly happy paying up to 4% in taxes to cover things that I use like roads, benefiting from police protection, army protection, and things of that nature. I’m not an anarchist or capitalist that thinks I should pay zero taxes and just be a mooch on society.  

I don’t mind paying some taxes, but once we get beyond 4%, we start going into things like the welfare state or wars. I’m not interested in paying for these things and, hopefully, you aren’t either. Right now, the obvious way to pay less taxes is to move to another country where you don’t get charged as much tax. The United States is probably the second or third highest, overall, behind one or two countries like Scandinavia.  

The Big Move 

I now live in Dubai. They pay zero tax, not low tax, but zero corporate tax, zero income tax, zero property tax, and zero payroll tax. There is a 5% sales tax which is ironic because, when I did articles on how I would design my ideal country, I literally stated that there would be no income tax at all, only a 4% sales tax. It’s funny that I now live in a country that reflects the tax structure that I considered ideal.  

How To Reduce Your Taxes 

The easiest way to reduce your taxes is to start your own business on the side. Start a second checking account, and it’s ok to have your name on it. Start running expenses of your business, like your cell phone, your internet connection and things of that nature, through your checking account with the intent to make a profit. You can immediately write off those expenses and immediately drop your tax rate down. 

If you’re in America, you can actually go into your work, if you have a job, and modify your W4. Raise the number of dependents you have that reflects the amount of money you’re deducting in your business, and you will automatically get a higher paycheck. This is $200- $400 more you will get on your paycheck, just by starting your own business.  

Yes, you have to eventually make some money, and every country is different about this, but you don’t have to immediately make money. The IRS, or the non-American equivalent if you don’t live in the United States, understands that it takes time to start a business and get customers. As long as you work toward the intent of making some money, you can start writing off those expenses and immediately save a lot of money in taxes. I’ve said many times, 99% of all tax law in western countries is written for companies, not individuals.  

So, if you’re an individual and you become a company, you start getting skewered when it comes to taxes. You probably don’t want to be in this category so, if you haven’t already, start a business. Alpha 2.0 means you already own your own business, which is location independent, ideally, so that you’re not locked into your current location, and you don’t have a boss telling you what to do.  

Closing Thoughts 

It is my hope that this blog has helped to open your eyes a little bit regarding the concept of you paying all this money in tax. The fact is, legally, you don’t need to pay all these taxes. If you still think you’re free as an American, this blog should show you exactly why you aren’t. 

This article was originally published on October 18, 2021