Why Criticizing Trump Was Wrong
As you may recall, last year The New York Times printed the “surprise” news that President Donald Trump paid next to nothing in taxes—$750 to be exact.
Of course, the liberal, far-left lost their collective mind over this news. But it’s nothing new.
While candidates normally choose to release their tax returns if they are running for president, Donald Trump elected not to do this. He is a smart man, and he knows that even if it is a sign of a good businessman that he pays little to nothing in taxes, that most people won’t understand.
They’d rather vote for politicians who are bad with money than a businessman who understands how money and taxes work.
During the 2016 election, Hillary and Bill Clinton released their tax return to the public. As The New York Times reported at the time, Hillary and Bill paid “$3.6 million in federal taxes for an effective tax rate of about 35 percent.” Most of this income came from speeches and Hillary’s memoir.
I find it interesting that Hillary chose to attack Donald Trump for not paying anything in taxes and celebrate that she paid so much in taxes.
This to me shows that Hillary is a career politician, while Donald is a career entrepreneur.
It also shows me that Donald is doing what the tax code was intended for, while Hillary and Bill are being penalized for not doing what the tax code was intended for.
As I’ve learned from my Rich Dad tax advisor, Tom Wheelwright, the most patriotic thing you can do is not pay your taxes!
I’ll explain what I mean by this in a minute, but first a history lesson:
The US Was Founded On A Tax Revolt
If you paid attention in school, you would have learned that America’s true start came in 1773 with the Boston Tea Party.
That’s right. America was founded on a tax revolt.
Tired of paying taxes on tea, the patriots threw the tea into the water. This eventually led to the Revolutionary War in 1776.
I’m not sure when so many in this country fell in love with paying taxes, but the reality is that the DNA of America is to pay as little taxes as possible.
Paying taxes is not patriotic. Taxes are theft. The reason why wealthy people like me hate taxes is because when you give a bureaucrat money, all they do is spend. Our country is massively in debt and they still want more.
The Tax Code Is Made To Incentivize
As you probably know, the tax codes in the US and in many different countries are long and complicated. The question is, why?
The reason is that government leaders learned a long time ago that the tax codes could be used to make people and businesses do what they want by utilizing the tax code.
In short, the many credits and breaks that are found in the tax code are there precisely because the government wants you to take advantage of them.
For instance, the government wants cheap housing. Because of this, there are many tax credits for affordable housing that developers and investors can take advantage of that minimize their tax liability, put more money in their pocket, and in turn, create affordable housing. Everyone wins. I, personally, would rather invest my money in affordable housing than give it to a bureaucrat.
Like real estate developers, business owners receive tax breaks for hiring employees. The government does this because the government needs jobs for people. There’s a steady stream of tax dollars flowing into government coffers from employee paychecks. So the government offers the incentive of lower taxes.
These are entrepreneurs such as Elon Musk. He receives billions in tax breaks from different states and from the U.S. government.
There are many scenarios like this in the tax code that incentivize investors and entrepreneurs to do activities the government is looking for, while rewarding those who take those actions with a lower-or zero-tax burden.
Because of this, limiting your tax liability actually means you’re doing what the government wants you to do through the tax code. And that is the most patriotic thing you can do.
Why Criticizing Donald Trump About His Tax Returns Is Wrong
The criticism last year of Trump in the media and by his opponents only serves to show their ignorance when it comes to money and taxes…and debt.
The other part of the news story is how much debt Trump has, but as he points out, if you look at his assets, he is actually underleveraged.
I love real estate, and so does Trump. Why? Because of debt and taxes.
You can purchase more assets for your dollar with debt. And you can save more in taxes through the tax code with credits and depreciation.
Apple, one of the richest companies in the world, has approximately $246 billion sitting in the bank. Yet it has borrowed billions of dollars over the past few years because of low-interest rates. Why does Apple borrow?
Apple borrows because debt is cheaper than repatriating cash, which means bringing money back into the country and paying U.S. taxes on it.
The general rule is that all income is taxable. Income is money you receive that is yours to spend as you please with no strings attached. Debt is not income. You have to pay it back.
So when you borrow money for an investment, it’s really tax-free money. This makes the debt less expensive than equity. Equity is your money that has already been taxed. So even if you have a 5-6% interest rate, the debt is far cheaper than if you had to use the equity on which you paid 40% tax.
It’s basic investing, but unfortunately, most people know nothing when it comes to money, taxes, and investing. So they howl and moan, showing they’re the highest-educated idiots in the room.
It was insanity for Hillary to criticize Donald for not paying taxes, and it was insanity for Biden to do the same thing. The reason he paid so little is because he’s been busy investing and creating jobs to receive the tax benefits that were created by the government!
Conversely, the fact that Hillary and Bill paid a 35% tax rate and millions in taxes show they are not doing what the government wants. They are not providing jobs, starting businesses, or investing in a meaningful way.
Personally, I would have rather had someone who understands how money and taxes work, how to create jobs, and invest in ways our own tax code incentivizes than one who doesn’t.
Criticisms of Donald Trump’s tax returns have capitalized on the general ignorance around money and taxes that much of our country has. In that way, it is actually a lie and a form of fear-mongering. It is an attack without legs to stand on, preying on emotions rather than appealing to logic and intellect.
But considering that’s what most of our politics has devolved to these days, who can really be surprised?
Editor, Rich Dad Poor Dad Daily