The New Stuff

Holes in the Tax Code


Years ago, while watching a cartoon on the television, I was amazed at what could be accomplished in a cartoon. The “Villain” was running around trying to escape from the police. He had a bag full of “holes”. He would reach in the bag, pull out a hole and throw it on the ground or the wall then he could climb thru it to escape. Finally, he had only one hole left and the police were close. He threw it on this wall, climbed thru and the hole would close behind him. However, the wall he threw it on was the city jail!

Although the story was funny, I probably shouldn’t use it to open a blog on holes in the tax code and being chased by the police (or the IRS). I am using the story (it’s my story and I’m sticking to it) because I want to briefly mention there are holes in the tax code and they are purposely put in the code for specific reasons.

After reading, Tax Free Wealth by Tom Wheelwright, I could see some of the pieces of the puzzle coming together. I could see why many US businesses moved their manufacturing offshore. It was the incentives created from the holes in the tax codes. In his book, Tom says there are incentives in the tax code for reducing tax obligations when the tax payer does certain things. These “things” are in regards to following the economic plans that governments encourage “investors” with tax breaks.


Are you familiar with these holes in the tax code? I bet 99% of the people reading this are not! I can say that because those that take advantage of this type of information are either “accredited investors or sophisticated investors”. These are being with net worth of over $1million dollars (and more for the sophisticated investor). This also precludes the fact that they are also “investors” and have this level of knowledge!

These holes in the tax code are big enough that you could walk thru while still standing up! Then, why can’t they be readily seen? Because no one (and his brother someone) isn’t asking for them! While reading Tom’s book, he mentions saving one of his clients $70,000 in taxes because of his knowledge and how to direct her.

How many people really have the level of investment income that they could save $70,000 on taxes?


In a previous post What Tax Rate Will You PayI wrote the following:

He uses some of the information from Robert Kiyosaki regarding choosing your career in regards to the taxes you will have to pay. 

I heard this a long time ago, “those that produce the jobs will pay the least tax rates and those that work the job will pay the higher tax rates”.

The more you produce, the lower your tax rates will be! Investors get the lowest tax rates because they produce the jobs that drive the economy. When will the investments gain tax reducing incentives? Without my magic wand, I can not comment on this. However, those of us that are members of Compumatrix now have an opportunity to go out and drive the economy!


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