5 Secrets How Billionaires Save Taxes
Warren Buffett who has a $93.4 billion net worth pay less tax rate (20%) compare to his secretary (37%)
Image Credit: Inc.com
Do You Know?
Wealth From Investing
Most of the richest people earn wealth from investing in the stock market and real estate, where income is only taxable when you sell your share or estate.
Amazon founder Jeff Bezos pays almost nothing in taxes because of most of his wealth is in amazon stocks.
Taxable Only When You Sell Something
Investing vs Salary
The top 1% of people make money from investing, so they are eligible for capital gain which is 20% but the most Americans get salaries which taxable at almost 37%
For example, you sell stocks with $400k profit and pay $50k capital gain tax but if someone who earns the same $400k from his salary pays almost $110,000 in tax
Two Tax Rates
Rich Become Richer
In the last 40 years, the growth of after-tax income is 400% for the top 0.01% of the richest but 50% for normal people.
Rich live on Loans so they don't pay taxes because a loan is not an income.
Elon musk richest person on the planet took a loan against his tesla stock.
The second popular way to save tax is Charity And Donation loophole
Let's assume a super rich buy a $10m painting and auction it up to $25m and finally donate to charity. From this act, he saves almost $15m in taxes which cost him $10m.
"The Wealthy are definitely undertaxed".
Rich inherit their wealth to the next generation and the guy who received it and then sells it would only have to pay taxes on what they earned after they inherited it.
Stepped Up Basis
Joe Biden wants to Tax the Rich by he increasing the capital gain tax rate from 20% up to 39.6% for gains above $1m.
Image Credit The New York Times
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