Rich Dad, Poor Dad – Lesson Four – The History of Taxes and the Power of Corporations
You know the story; Robin Hood took from the rich and gave to the poor!
Some of the first taxes were enforced to finance wars; in Britain it was the fight against Napoleon from 1799 to 1816 and in America the civil war from 1861 to 1865. Income tax became permanent in England and the United States in 1874 and 1913 respectfully. The government gained acceptance of the majority by telling the poor and middle class that the taxes were to follow Robin Hood’s philosophy of take from the rich, and give to the poor…
Initially these taxes were imposed ONLY on the rich. But as the government got their taste for the money, they got greedy and the taxes were imposed on the middle class and the poor as well and this continues today.
The harder you work the more tax you pay. The rich (in fact the wealthy; those with financial education) have the money, the power and intelligence to change things. They have a high Financial IQ.
Robert Kiyosaki identifies the following four main elements of Financial IQ.
Accounting – Financial literacy; the ability to read and understand financial statements, identify strengths and weaknesses. Accounting is about the details, Accounting uses the left side of the brain.
Investing – Money making money. Investing is creative. Investing uses the right side of the brain.
Understanding markets – Supply and Demand factors.
Law – Understanding of tax advantages and asset protection.
People with a high Financial IQ look at ways to minimize their tax obligations and that’s where Corporations come in. Corporations and also Trusts are created by legal documents. A Corporation is a separate legal entity or body, separate from its owners; this provides asset protection to individuals. Corporations are taxed at lower rates than individuals.
Employees earn money, are taxed on that money and spend what is left.
Corporations earn money, spend money and are taxed on what is left.
The rich, the wealthy are not taxed, it is the middle class who are taxed and the high income middle class are taxed more, as the more they earn the more they are taxed!
With money comes power and if I can quote my son Corban, who loves to quote a famous line from Spiderman – “With great power comes great responsibility” – and in this context your responsibility is to look after the money you earn; understand it, protect it, make it work for you, make it grow.
This article was inspired by well know Investor, Entrepreneur and Educator, Robert Kiyoaski’s famous book: Rich Dad, Poor Dad. What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!
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