I’m not in the 0.1%. With a net worth north of $7M that puts my family in the top 2-3%. But in my 20s and some of my 30s my net worth ranged from around $0 up to $100K with a take home income of $36,000.

Back when I was broke, taxes HURT. A tax bill could really ruin me. Relative to my income and net worth it felt like it could just wipe me out. These last few years, despite my net worth continuing to grow, I’ve ended up with a tax refund rolling over year to year. The exact reasons, and the lines of the tax code are nuanced, but the takeaway for me is clear. Taxes (and pretty much everything else financially) sure is easier when you’ve got a lot of money!

There are lots of ways our tax code is sneaky regressive. Property tax SEEMS like it should be a “flat” tax, with everyone paying the same percent. But since the wealthy have SO much of their wealth in stocks, bonds, and private businesses, they end up paying way less in property tax relative to their net worth. Meanwhile, the middle class suffers from a LEVERAGED tax. While they may only “own” 20% of their home (the bank owns the rest), they’re on the hook for paying tax on 100% of the value. Ouch!

I imagine I’m going to get some mean comments about this, yelling at me for suggesting we should tax the rich more. If you look carefully at this post, you’ll see I never passed judgment on the situation. If you see this imbalance and it makes you feel something, maybe it’s YOU who thinks the tax code needs to change?!

At any rate, I wouldn’t wait for the tax laws to change. For YOU PERSONALLY, I suggest building wealth to get over the hump and on the easy side of finances by following the two rules!

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy