“Teach your children about taxes, eat 30% of their ice cream.”
The first time I heard it, I thought it was brilliant!
Many doctors would argue that to be an underestimation of their tax burden. When you consider federal income tax, state taxes, payroll taxes, sales tax, property tax, gas tax, and all of the other governmental fees and taxes some will claim they pay up to 50% of their income in taxes.
With all of this in mind, I set out to perform a social experiment on my kids. I was determined to teach them about taxes – and eat some ice cream to boot.
In fact, I would encourage you to do the same (assuming they are old enough to understand).
However, in my case it wouldn’t be that easy. I needed to strategize. When it comes to ice cream, I have an Achilles heel. Like most people, I like chocolate, strawberry, and vanilla. I certainly wouldn’t protest if you added nuts of any variety, chocolate chips, banana, and even one of a whole host of cookies, brownies, or candy bars.
What I won’t eat, however, is marshmallows. Yuck!
You know marshmallows – those nasty little spongy globs of sugary goo. I can’t stand them. When I go camping, I don’t want S’mores. At Thanksgiving, I quickly walk past the sweet potatoes topped with them. And Peeps certainly are no friend of mine.
When it comes to ice cream, there is one type I absolutely refuse to eat. It’s called Rocky Road. It’s my marshmallowy nemesis.
It just so happens that my boys love the stuff. While I wanted to teach them a lesson, I had no intention of eating that poison.
Therefore, I scouted the ice cream section to make sure that there was no rocky road in sight. Once I determined that I was free and clear, I allowed them to select a pint of their choice. After ascertaining that rocky road was unavailable, my youngest selected cookies and cream and my oldest mint chip (not a fan, but at least it wasn’t rocky road).
After dinner that night, I took each one aside separately and scooped a single scoop into a bowl. Then I took a spoon and cut that scoop in half. Then I asked, “How much had I divided that scoop by.” Each replied, “Half.” Then I ate that half.
You should have seen the look on their faces.
The oldest was shocked and annoyed. “Hey!” he protested loudly. The little one looked up at me with his big blue eyes in disbelief, clearly saddened.
Then I explained to them about taxes. As it turns out, neither of them are big fans.
I bet you aren’t either. Like a lot of people, doctors go to work trading their time for money. Unfortunately, that earned income is heavily taxed. Most doctors pay somewhere between 30% – 50% of their income in taxes. That is the equivalent of working the first 3.6 to 6 months of the year to pay the government.
As I explained to my kids, “We are real estate investors and real estate investors can structure their investments passively in a way in which they can keep all of their ice cream.”
That’s right, multifamily real estate investing is so tax advantaged that virtually anyone who invests in it should be able to create a tax-advantaged passive income stream. In fact, it’s even possible to invest in multifamily real estate in such a way as to never have to pay taxes.
Want to learn how?
Then sign up for NestEggRx’s free 100% educational webinar:
This is a must see webinar. So sign up now and forward the link to your colleagues. I’m willing to bet that they are paying too much tax too.
To Your Wealth!
Dennis Bethel, M.D.
P.S. When it was all said and done, I couldn’t help but give each of those kids another scoop of ice cream. My wife was quick to remind me that a tax refund is not the equivalent of a whole second scoop. True enough, but multiple untaxed full scoops of ice cream is what successful multifamily real estate investors get to enjoy. I might as well get them used to that fact now.