The worst tax advice you could ever follow

If you are given the following choices to a tax question, then you should choose D instead of C:<br><br>1. A, you keep the money.<br><br>2. B is paying more tax than is absolutely necessary, it is the correct answer, but you can do better than that.<br><br>3. D. You pretend that you made no money, and write off your $100k as a business loss.<br><br>This is legal in many countries, and it is legal in the US. You can be a venture capitalist who made a billion dollars. You can buy a private jet for a billion dollars. You can make a big show of flying it for the next year, to a dozen holiday parties. You can keep the expense report.<br><br>But if you lose a billion dollars, then you have to write it off your expense report, at the end of the year.<br><br>This is legal everywhere, and you should do this if you are rich. If you are poor, this does not apply to you.<br><br>When you earn money, you pay taxes on the wealth, not the income. Say that you earn $100k a year. You pay $20k a year in income taxes, 20% of your income.<br><br>But if you earn $100 million a year, you pay $20 million a year in income taxes, 20% of your income. You keep all of the wealth except 2 cents for every dollar that you earn.<br><br>When you lose $100 million dollars, you write off your expense report for $20 million in income taxes. You keep all of your wealth except 2 cents for every dollar that you lose. This is what venture capitalists do, this is what Warren Buffet does.<br><br>The trick here is that you can legally change your income status every year. The US government is incapable of keeping track of wealth, let alone income. They don't know if you made a billion dollars this year, or if you made $100 million dollars last year, and spent it. It is easy to hide wealth, and you have plenty of legal ways to do it. <br><br>There is a 40k deductions for business travel. So the head of a hedge fund can take his family on a 40k vacation every year.<br><br>There is a 20k deduction for a home office, if you are a lawyer or a doctor. So you can own a mansion, and deduct rent for your office.<br><br>There is a 20k deduction for business entertainment. So you can take your clients out to dinner, and you can deduct it.<br><br>You can also buy a yacht, and deduct the maintenance costs for the yacht. You can buy a private plane, and deduct the maintenance and fuel costs for the plane. You can buy a car for your wife, and deduct the gas and maintenance for the car. <br><br>You can write off anything that you buy that serves a business purpose. If you buy it for business, you can write it off, if you buy it for pleasure, you can't. If your kid broke his arm, and you took him to Disneyland to cheer him up, then you can't write off your trip. But if you took him to Disneyland for a business meeting, then you can write it off.<br><br>There are a million ways to legally hide wealth, if you are rich. There are a million ways to legally avoid paying taxes, if you are rich. It is easy if you are poor. You can't do it. If you are rich, it is easy. There are a million ways to legally do it, and only a tiny minority of the rich fail to do it.<br><br>The head of Goldman Sachs made $20 billion dollars last year. He paid $200 million dollars in income taxes. That is 1% for every $100k he made, instead of 20% for every $100k he made. That is what happens when you are super rich.<br><br>The world's billionaires got their wealth from being super smart in finance. They know how to hide their wealth and avoid taxes. The head of Goldman Sachs knows more about finance than you do, more than me, more than any teacher, more than any professor, more any textbook, more than any news reporter, more than anyone who is not a finance billionaire.<br><br>When the world's billionaires made their fortunes, they did not pay much in income taxes. They have used their wealth and their expertise to organize society so that they continue not to pay much in income taxes. That is what they do.<br><br>Warren Buffet says he pays more in taxes than his secretary, which he does not. This is a well known quote, which is not true. It is a well known lie. It was reported by the news, and repeated by teachers, professors, and reporters. It was said by a billionaire finance expert, so it must be true. It is a lie.<br><br>It is easy to hide your wealth if you are rich, and very hard if you are poor. You can pay more in taxes if you are poor, there is no choice. You can legally hide your wealth and pay less in taxes if you are rich, there is always a choice.