Everybody knows they have to pay taxes. It’s the law!
Read through all the tax laws you want; there are so many of them that it is impossible for you to ever know them all. You will quickly notice that they all have one thing in common: they are all written for the purposes of making you owe more taxes. Right?
From now on, we should think that the tax laws are written only to reduce the amount we owe. That’s right. The whole point of each and every tax law is to benefit us. It is financially dangerous to think otherwise.
1 – It is true that the interest your money earns while sitting in a savings account is considered taxable income.
2 – It is also true that the government gives you a tax break for buying a home (the mortgage interest is either a tax deduction for your primary home or can be written off as a business expense for investment property).
So, the government taxes your savings and gives you tax breaks to go into debt.
This seems, at first, like these incentives are backwards, doesn’t it? Isn’t it more responsible to save and to avoid debt? Why should the government reward my going deeper into debt and punish me when I am saving? That doesn’t benefit me at all!
Stop and remember that, from now on, we should believe that the tax laws are written only for our benefit. It is financially dangerous to think otherwise.
With our changed perspective, we might think, “When I go into debt, I make money off it. If I buy a home, I make sure that I can rent it out for more than it costs me. That way, I make money off my debt. So the government is rewarding me when I put my money to good use and punishing me if I hoard it and am too lazy to invest it!”
You see, the same laws can be looked at in two entirely different ways.
The first way – where we thought the tax laws were written against us – the tax laws did indeed cause us financial harm. If we went through life thinking this way, we’d struggle to save a few dollars, lose some of them to taxes, and sink deeper and deeper into debt.
The second way – where we thought the tax laws were written to benefit us – the tax laws were encouraging us to be responsible with our money. By going through life this way, we’ll continuously use our money to make more money, and we’ll get all kinds of perks from the government for doing so.
Same laws. But two completely different results.
This is just one example. Every situation and every tax law can be looked at in either of these two ways. You can either exhaust yourself and get nowhere trying to swim upstream, or you can go with the flow.
When you go with the flow, you will create jobs, create investments, produce value, and benefit our economy. That’s why the government sets up the rules this way.
Now, of course, if you’re used to thinking the first way, it won’t be easy to change your thinking all at once. But, each time you come across a situation where the tax law seems to be written against you, exercise your brain and try to find why it is beneficial to you. You won’t be able to do it every time, but keep trying. Slowly, you will adjust your thinking, and one day, when it becomes natural for you, everything you touch will turn into money.
(*tax man image via Shutterstock)