According to Dartmouth Town Collector Gary J. Carreiro, Fiscal Year 2020 first and second quarter real estate and personal property tax bills have all been
How do the wealthy minimize their tax burden in the U.S.?
tax burden by following, to the extent possible, the and disincentives of , just like everybody else. That is to say, the law (i.e. the and the state legislators) is telling you (and everyone else) to:in the minimize their
- as much as possible for the long term, and earn income from which are subject to the (lower) , rather than the . Look for in capital appreciation rather than or other regular distributions.
- Don’t keep physical cash around, because sucks.
- Leave as little cash in taxed at income tax rates. And sucks! (banks never pay enough interest to beat inflation).
As much of your money as possible should be invested in long term investments.
savings accounts as possible (i.e. just enough for your daily/weekly/monthly living expenses), because income is
- Don’t earn taxed at income tax rates, and is subject to payroll taxes, too. income, because that’s
- If you must earn a wage, take the after-tax proceeds, spend as little as you can (spending gets hit with ), and invest, invest, invest. When your investments are large enough that you can happily live off your capital gains (less capital gains taxes), quit your job. See also .
- Reduce your taxable wage income as much as possible with , e.g. max-out your contributions. Prefer to work for a company that will match 100% of your 401(k) contributions. This is more long term investment.
- If you’re working for a pre-taxed at capital gains tax rate, rather than at the higher income tax rate … if the company succeeds (yes, this is taking an investment risk). , take as little cash compensation as you can (just enough for your living expenses), and as much as you can negotiate (preferably ), provided that you believe in the probabilities of success of your employer. You’re investing in your employer’s company with your labor (hence “sweat equity”) if you do this, and the , if properly done, gets
- Live in a state with low total taxes (typically some combination of income, , and ), but the totals vary widely.
Naturally, the governments of really pleasant, attractive places to live (e.g., have higher taxes because they know that’s what the market will bear (though they do overreach with regularity) – that’s the tradeoff you make by living in such a place., ) will
. Every state has some
- Buy a
While generally true, sometimes real estate market conditions make more economically rational than buying – do the “rent vs. buy” calculation.
Further, remember that buying a house reduces, to some extent, your economic mobility (i.e. it’s harder to move someplace else to take a better, more remunerative job), depending on the liquidity of the housing market you buy in (if it’s hard to sell at a good price, it’s hard to leave).
( ), and keep a loan out on it so you can deduct the interest on the mortgage loan from whatever income you do earn (i.e. the ). Be sure to buy in an area likely to see and thus appreciating values (e.g., not ).
- Invest in tax-free government bonds (e.g. “ ”) because the profligate government needs to borrow your money. The yields (interest paid) on these bonds are lower, because the total effective return is increased by their returns not being taxable. However, watch out for – government entities do on their bonds from time to time which is why they all have , even the .
There is no such thing as a “risk-free” investment.
- Do contribute to non-profit taxes. Also, it’s better to support private charities by because they’re more efficient & effective deliverers of services to the poor than their government competitors. They have to be better, because you’re not forced to donate to them, and if you’re not convinced they’re doing good, you can stop supporting them at any time. – you can deduct some of that from your income subject to income
- Don’t smoke taxed pretty heavily via (a.k.a. “sin” taxes). also tend to be heavily taxed to discourage overconsumption ( ). , or consume other products – they’re
- Buy as much stuff via mail-order and Internet from out-of-state vendors, thus legally avoiding and illegally your state’s “use tax” (equivalent to the , generally … if your state has a sales tax; some don’t, e.g. ) just like everyone else does, because (except for vehicle registrations) the states have no enforcement mechanism available to them to collect use taxes (i.e. it’s illegal for them to open your mail and see what you’re buying because of the , and the Interstate of the ).
Unfortunately, this bullet point of been blown up by the 2018 ruling in , and states are rapidly moving to collect sales tax on out-of-state purchases (and online/mail-order vendors are moving to comply). The window has not yet completely closed, but it is closing.has
Ask any tax laws?” and s/he’ll tell you all this stuff, and more., “what is the government telling me to do, and not do, in the