Why Higher Taxes Can Boost Your Wealth!

8 Oct 2024

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The speaker argues that to build wealth business owners should sometimes pay more tax because banks base lending decisions on reported profit/net earnings; showing low income to minimize tax reduces borrowing capacity. The speaker claims numerical scenarios (from a previous book) show paying more tax upfront and focusing on building wealth repeatedly produces better long-term outcomes than aggressive tax minimization.

I'm sure people listening to this aren't going to like me for this, is that if you want to build wealth, you must pay more tax, because the bank's servicing rules are based on your profit or your net earnings. And the issue is, for most of us business owners, our accountants tell us to rack up our expenses and show as little income as possible. So the bank's never going to lend you a dollar if you are only showing 30 grand of income. Right. Just to put this into perspective, and I wrote about this in my last book, so I've done scenarios of showing the difference between focusing on building wealth and paying more tax or optimizing tax, and which one puts you in a better situation. And in every single scenario that we've run the numbers on it, you end up multiple times better off paying more tax on the upfront and building wealth than trying to minimize tax.