The Trouble with the Income Tax
You must know the difference between an asset and a liability,
and buy assets. If you want to be rich, this is all you need to
know. It is rule no. 1. It is the only rule. … It sure beats saving
$100 a month, which actually starts out as $150 because it's
after-tax income, for 40 years at 5 percent, and again you're
taxed on the 5 percent. That is not too intelligent. It may be
safe, but it's not smart.
—Kiyosaki, Rich Dad, Poor Dad
THE INCOME TAX AS IT EXISTS TODAY IS A BAD TAX. FEW Americans would argue with that statement. But what exactly is wrong with it? Using only the basic facts about tax discussed in chapter 1, we can now reach a surprising insight. The deepest problems with the income tax relate to its erratic and wrong-headed attempt to tax savings. This leads us to a major theme of this book:
If we stopped trying to tax savings directly, our tax system
would get much better overnight.
Once we've come to understand the problems with our inconsistent income tax, we'll also understand the reasons for moving to a consistent spending tax.
Let's back up for a minute. A good tax should be simple, efficient, and fair. That's not asking too much. But the income tax is too complex, too inefficient, and too unfair; it's not a good tax. All three of