Mark Kohler explains why a tax write-off shouldn't be your reason to invest. A $100,000 investment in the 37% tax bracket saves $37,000 in taxes, not $100,000. If it fails, you lose $63,000. Tax deductions reduce what you owe, not what you spent.
Everybody, please. I know how bad you want that tax write-off, but does the investment make sense without it? That's your first question. And that's where I had a problem with solar. I couldn't even make sense of it. I mean, what the hell do I have 10 years from now? Does it even make me money? Oh, but don't worry about it, you get the tax write-off.
No, no, no, no. Tell me my money was spent wisely. Let's say you made a $100,000 investment and they're like, well, you can get a loss of $100,000 back in year 1, the whole thing. Okay, you're in a 37% tax bracket. Did that save me $100,000? No, that saved me 37%. $37,000. It didn't save me $100,000, it cost me $100 grand to make $37K. So if I lose everything on that investment, I'm down $63,000. You've lost money, okay?
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