Ryan VaughnCOO of Incite Tax & Accounting. Ask me anything about your taxes.

Pay Taxes Like The Rich Strategy 2 | Incite Tax

29 Mar 2024 · 1 min

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In this segment of the video, the presenter explains that wealthy individuals often favor investing their money because investment income is taxed at lower rates than ordinary salary or active business income. He contrasts the tax treatment of a company president who earns a salary (subject to ordinary tax rates) with that of an equity owner who receives passive investment income, which enjoys more favorable tax treatment. The core message is that shifting wealth into passive equity ownership can reduce overall tax liability.

Chapters

Now another thing that wealthy people do is that they invest their money because income from investments has a lower tax rate than income from like getting a salary or direct business income that you contribute. As like, I'm a president of the company and I'm working in the company, I'm gonna pay an ordinary tax rate on on that income versus giving money and just owning equity in a business that I don't have any day-to-day responsibilities. That type of investment income is taxed a little bit differently.