From: alexhormozi
Many wealthy individuals in high-tax states like California employ specific wealth creation techniques to mitigate the impact of taxes [00:00:00]. This approach, sometimes referred to as “wealth out,” allows for significant growth in net worth while minimizing immediate tax liabilities [00:00:13].
Tax-Efficient Wealth Creation
A key strategy involves reinvesting significant capital back into a business rather than cashing out profits directly. For example, if an individual earns 1.5 million after taxes [00:00:17].
However, if 120 million added to the business alongside the $3 million in cash flow, the effective tax rate on the total wealth could be as low as 1.5% [00:00:42].
Tax-Free Compounding
As long as the wealth is continuously built within the business and not cashed out, all of that growth is tax-free and compounds over time [00:00:54]. This understanding can fundamentally shift one’s approach to personal finance and wealth accumulation [00:01:01]. This highlights an advanced form of tax savings strategies.