CHAPTER 16Free from tax

The real tax secrets of the rich. Thinking in four dimensions.

Tax. To most people it’s a four-letter word.

Once you start making even a modest amount of money, tax quickly becomes one of your biggest expenses. I remember reading that a serf in the Middle Ages could perform his feudal duties to his lord in fewer months of the year than it takes the average employee today to earn enough money to cover their tax bill. Not only that but they had more public holidays back then too!

When it comes to wealth building, personal finance or even dinner table discussions, there is hardly a topic that is debated with more passion. Why do we hate tax so much? After all, given the choice, most of us would rather live in a country with well-developed laws, freedoms and personal security, than one without. And if push comes to shove most people will acknowledge that tax is the way we have to pay for all that.

I think the reason tax is so universally hated is because of the way most people first experience tax. For most, tax is something we don’t get a say in: it’s taken out of our salaries before we even get paid.

The trick is to stop thinking of it as ‘your’ money.

IRS auditor, anonymous

When the pay slip comes, there it is, in insultingly clear figures: ‘This is your gross salary (what you could have earned); this is your net salary (what the tax department is letting you keep); and finally this is the tax that we have already taken out of your pay cheque. And ...

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