In my extensive 35-year journey within the financial services industry, I’ve had the privilege of collaborating with individuals, married couples, families, multi-generational households, and dedicated business owners from various walks of life. This immersive experience has been complemented by the completion of numerous financial, tax, and economic courses, where my focus has consistently centered around unraveling the complexities of wealth building, retirement planning, and the intricate facets of economics.
Beyond my professional practice, I am personally involved in other small businesses and actively contribute to the decision-making processes of corporate boards and advisory committees. Through this multifaceted exposure, a compelling realization has emerged – a recognition of two significant pitfalls that claim a considerable portion of nearly everyone’s wealth: the destruction of wealth by confiscatory taxation and the often overlooked impact of paid interest.
We’ll delve into these financial chasms, exploring strategies to navigate them successfully and safeguard your hard-earned money. Join me on this insightful journey as we unravel the nuances of financial well-being and equip ourselves with the knowledge to grow, build and fortify our financial foundations.
First Pitfall – Taxes
Discovering that the average American pays more in taxes throughout their lifetime than on the combined essentials of food, shelter, and clothing is a staggering realization. The intricate web of taxes imposed by the federal government, each state, and local municipalities is mind-boggling. With the Federal Government annually collecting over $3,000,000,000,000 (that’s a trillion!) in taxes from citizens and corporations, it’s astonishing that these entities still grapple with meeting their financial obligations.
Here’s a financial fact to ponder: Taxation is, in essence, a form of theft, operating under the assumption that the government possesses a higher claim to your property than you do. Delving deeper into the world of taxation, another critical factor emerges – the unintentional and unnecessary overpayment of millions of dollars to the Federal Government by most taxpayers. This overpayment essentially provides the government with an interest-free loan for 12 months, only to be reluctantly returned as a “tax refund” devoid of any earned interest.
Your overpaid taxes are a consequence of various factors, ranging from misplaced trust in the IRS to ignorance, misguided advice, financially uneducated human resource personnel, or adherence to erroneous conventional thinking. It’s time to wake up and become aware of the reality of what is happening with your money, considering that taxes constitute your largest and most consistent annual expense.
Exploring the historical narrative, the tax code, initially established for a temporary purpose in 1913 with a maximum rate of 7%, has evolved drastically. Although conceived to fund America’s involvement in World War I and slated for elimination afterward, the maximum rate has fluctuated between 7% and a staggering 94% based on income levels. Overseas conflicts and wars often become opportunities for the Federal Government to hike taxes, and unfortunately, these rates rarely revert to their original levels after the fighting concludes.
Instead, Congress tends to funnel new tax dollars into pet projects, pork-filled bills, and new legislation, perpetuating a perpetual and infinite cycle. While acknowledging the need for a robust federal governing institution to provide constitution-outlined services and defend the nation, there’s concern about the deception and deceit employed by lawmakers. Their focus on fundraising for re-elections often takes precedence over conducting the business of the American people in an economically efficient manner.
Despite efforts, including Donald Trump’s plan to simplify tax returns, the tax code remains complex and ever-evolving, comprising tens of thousands of pages. The aim here is to alert readers to the costs and price they are forced to pay to live in our current tax environment. Managing personal and business taxes are crucial for forging a new and prosperous path in your life—a journey toward minimal taxation and a debt-free/stress-free existence.