You are currently viewing “Capital Income”: Know This Formula and You will Pay Less Taxes in Future
Concept of taxes paid by individuals and corporations such as VAT, income tax and property tax. Background for your business

“Capital Income”: Know This Formula and You will Pay Less Taxes in Future

 

Patrick Iturra Report

As a strategic investment advisor, I will dedicate this blog to all Americans who work hard to make a living and pay any taxes. Taxes are the reason why the rich become rich, and the poor become poorer! 

Taxes are the reason why the rich become rich, and the poor become poorer! I am quoting this statement because taxes do not work the same for high-earning Americans compared to the working class.

As per ProPublica’s report, top American executives, including Jeff Bezos, Warren Buffet, and Elon Musk, paid fewer taxes in proportion to their wealth. It is mentioned in the report that billionaires: Jeff Bezos, Elon Musk, Warren Buffet, and Michael Bloomberg paid only 0.98%, 3.27%, 0.10%, and 1.30% of their income in taxes.  

For an average American living paycheck to paycheck, this might not make sense because the general notion here is that higher-income means high taxes. But the rich do not think the same way as we do! 

As a strategic investment advisor, I will dedicate this blog to all the average Americans who work hard to make a living and pay a lot of taxes. 

Introducing Capital Income: The way the rich invest their Money! 

When you check into how rich people manage their Money, you will notice that they make capital investments. 

Capital investment is the Money invested in real estate, stocks, or bonds. To make this simple, under the capital investment as an asset that will generate income/profit on sale/maturity. 

For example: If a person invests $100,000 into a stock, and the stock values at $200,000, then that person is not liable to pay any taxes until he sells the stock. 

The net worth of that person has increased without any liability or by paying excessive taxes. This is what most millionaires do, they buy stocks/ wealth-generating assets and hold them over a long period!

How the rich avoid paying high taxes! 

It is pretty clear from the report that the rich have found ways to avoid taxes, but people have different opinions to fix the problem. 

People have been recommending tracking their assets and tax them based on their growth. It has to be imposed as a wealth tax.  

Tracking asset growth is highly complex because the valuation of assets and businesses varies depending on the market situation. Many tax professionals have suggested implementing value-added taxes, just like the one on the sale of goods and services. 

No matter how the laws are made, taxation has always been in favor of the rich. Many administrations have tried to implement strict taxes on the rich, but we have witnessed the rich becoming richer. The working class is the one that feels the crunch!

But, defaming or blaming the rich is not the solution! If a middle-class wage worker wants to be rich, then he has to understand compounding. 

Yes, compounding is the essence of investing. When you channelize your Money through the right investment, it works! 

Understand the Concept of Compounding 

You had invested Money in Apple when it was listed for $22 per share in 1980—assuming that you invested $2,200 in a whole year when the average American salary was $12,513.46. You got the ownership of 100 shares of Apple. 

Considering the same share of stocks today, they would have been worth $14,265. Sounds normal, right? 

Wait, let me introduce you to a strategic investment plan. Let’s say that in 1980, you made about $15,000 per annum, which amounts to $1,250 per month. Keep in mind your cost of living was way less at that time. You invested $100 every month into stocks like Apple, Microsoft, Walmart, etc. Let’s say that your investments give you a return of 10% every year if you continue to invest your Money for 30 years. 

Now, here’s how an ordinary person thinks: Why am I putting $100 into this? What difference does a mere sum of $100 make? 

Well, that’s when it goes wrong! 

Most people do not understand compounding, and the top 1% of billionaires practice and know the power of compounding. 

Again, back to the example: 

$100 for a month from 1980, divides it into a contribution of $36,000. But the valuation of those would have been $585,422.17. 

That’s half a million dollars! 

Compounding is the eighth wonder of the world, and the rich know it very well! They hire strategic investment advisors to look into their portfolios to help them with their investments. 

 "Capital Income": Know This formula and You will Pay Less Taxes in Future!)
“Capital Income”: Know This formula and You will Pay Fewer Taxes in Future!)

 

Make your Money Work as Hard as you work to earn it! 

Most Americans get paid by providing labor and their services in exchange for a paycheck. However, if you want to be rich, then you have to invest! 

Many people understand investing, but they want it quick. They want to become rich overnight. Although it is possible, if you win a lottery, not everybody is that lucky! 

As a professional, my recommendation: Strategic Investment with diversification into wealth-building assets like real estate, stocks, crypto, bonds. 

No matter how much you can invest, the investments today will yield returns in the long run. 

Over the past 24 years, I have helped people generate wealth-generating assets, and I want to do the same for you. All you have to do is to contact me here. 

I will look into your finances and come up with a strategic investment strategy for you. 

I am here to help! Let me know if you have any questions. 

 

Patrick Iturra Report

Leave a Reply