https://www.youtube.com/watch?v=YhxiVIQp\_ws

1 00:00:00.000 --\> 00:01:00.000 in this video i want to talk to you
about the tax strategies of the ultra wealthy and as someone who is
ultra wealthy i find it ironic that the vast majority of videos that i
see on youtube are made by people who are not ultra wealthy talking
about how the ultra wealthy do things when they have no transparency
into what those actions actually are \[Music\] i have gone through i've
spent probably 750 000 on different tax advisors different tax
strategies to try and figure out at least the u.s system to you know
minimize tax drag and uh the conclusions that i have are somewhat simple
and i want to share this with you so i can hopefully help you avoid a
lot of the headaches and pain that i had to go through in this process
and for context in the last three years i've spent 18 million dollars or
i've paid 18 million dollars in taxes to the us government and happily
done so uncle sam but what i want to do is rather than talk about the
little itty bitty hacks i want to shift your perspective around them
because um as i've looked into many many many of these things that are
touted as tax strategies most of the times they are they are just tiny
little bbs that do not make a significant difference

2 00:01:00.000 --\> 00:02:00.000 and so if i can shift your perspective
around this and get you to think the way the ultra wealth you think
about taxes then i think that will make a bigger difference in your life
than anything else will right off the bat the first thing is where you
live is going to make uh you know the biggest initial difference and so
first off in the u.s at a state level where you live is going to you
know you can have a zero tax day versus you know california is a 15 or
16 tax date plus all the other taxes they tack on everything else you do
and so you know the first and obvious thing to do is you can live into
live in a lower tax state now the second level of this is what country
you live in and so if you are a u.s resident you you suffer from uh
global taxation meaning it doesn't matter where you live they're going
to tax you and so there's only two ways to get around federal tax the
first is to live in puerto rico six months of the year and export
services from puerto rico if that is you you can do that it's a four
percent federal tax rate so you can have zero percent state four percent
federal and live there it's 100 legit it is legal to do that the other
way to do it is to expatriate meaning you stop becoming a us resident
you renounce your citizenship

3 00:02:00.000 --\> 00:03:00.000 um as a u.s citizen and then you come
back basically as an alien the way that you do that is you can become a
citizen by investment you spend a million dollars uh in investment uh
into the us and then you get basically a golden visa which means you pay
for it and again though you have to be here less than you know six
months of the year otherwise you then become a u.s tax resident again
even if you're uh not a us uh citizen so the the big conclusion here is
in the beginning you know get out of the states that are you know the
high tax states move to a state that is lower tax but what i want to do
is shift your perspective around this overall big picture because if you
look at how your wealth will compound and again this is why i said this
is tax strategies of the ultra wealthy the vast majority of your net
worth is going to come from growth not the contributions okay and so if
you plug your money into or what your what your retirement calculator
you can google when they're all over the place you'll be able to see
that the vast majority of your net worth over time is going to come from
the growth of the assets that are in it not from the contributions and
it comes mostly from starting early

4 00:03:00.000 --\> 00:04:00.000 and so that is why i'm such a big
proponent of living on absolutely nothing for as long as humanly
possible so that you can so you can start using the compounding interest
of time to your advantage and for perspective for everyone who's
listening to this don't think right now i can only put 500 a month aside
it's not going to make a big difference the thing is is that 500 a month
when you are 20 will make a bigger difference than 5 000 a month when
you are 45. so think about that for perspective all right the dollars
now count 10 times more than the dollars in 10 years and so forth okay
so that's number one the second thing that the ultra wealthy do in terms
of uh tax considerations is that they think differently about how they
buy so for example if i buy something that's worth a hundred dollars for
thirty dollars i instantly tripled my money except i didn't pay tax on
that tripling right because the value of what i purchased is worth three
times more than what i paid for it but the beauty of this is that i get
that gain without having to pay taxes on it and then it continues to
grow and compound again without taxation and so the vast majority of
much wealthy people understand this and they and they structure their
life and their investments in that way which leads me to the third thing
which

5 00:04:00.000 --\> 00:05:00.000 is how slash if you sell so the only
reason that the the tax rate is going to matter to you is if you pay
capital gains and that means that you've chosen to sell but there are a
lot of strategies around buying and holding you look at warren buffett
he's held he's held seized candy for how you know 30 something years or
40 something years same thing with coca-cola right same thing with geico
he continues to buy things and hold them because he realizes that the
tax treatment is going to be so efficient if you buy correctly and so
the goal is to think from the perspective of not i'm going to buy it and
try and flip this i'm going to hold this for five years or this company
looks good for this month is do i think that this thing is going to last
for a very long time and if so i will get disproportionate returns by
buying safe and buying something that's going to be here in 30 years
then trying to buy something sexy now and so if you can understand that
then you buy things to hold them for the long term because the biggest
shift in perspective the ultra wealthy have versus the not wealthy is
that they think in longer time horizons they think about generational
wealth they don't think about what i'm going to pay for this month how
can buy a car or whatever the fancy stuff that leads naturally to

6 00:05:00.000 --\> 00:06:00.000 the fancy stuff which is like well if
i'm buying all these things how am i going to live my life later good
question well the cool thing about how the u.s tax code works is that
loans are never treated as income but they are spendable money that you
can consume and use and so for example if i continue to plow all of my
money into assets that earn while i sleep which is the definition of
wealth that i gave you one of my other videos if they continue to grow
and they are growing tax-free then the growth that is tax-free i can i
can realize by taking loans against those things and i can use those
loans to live my life and as long as the loans that i'm taking are less
than the growth of my assets then i can use all of that growth continue
to let it compound tax free for the rest of my life and live off the
loans and when i dab they can they can rectify my account and so these
are the strategies of the people who are ultra wealthy the things when
they talk about conservation easements which is uh basically you donate
land and you get the full value of the land even though you didn't pay
the full value it's it's a bb right you're not going to be able to put
your entire income against that uh you know captive insurance i've got a

7 00:06:00.000 --\> 00:07:00.000 friend of mine who was like dude do
this thing with me and say and for me it ended up it was going to save
like 250 thousand a year which honestly doesn't make a big dent for me
and it wasn't really worth the hassle so i was like i don't know this
was a little fishy guess what happened the irs ended up flipping the
their rule ruling on it saw people taking advantage of it and then they
back back charge people with interest and fees right and so the thing is
is that the us tax code is not fair because the government can change
the rules whenever they want they can say you know what we changed this
rule this year and we're going to back text people three years they can
do that because they have complete control there's nothing we can do
about it right i like to think about it just like i think about content
on any kind of platform is that i just have to align within the rules
that that exist and long term if i don't sell anything i'm not going to
get taxed on it and so the idea long term is live for less than i you
know for as low as i possibly can if you like island living then by all
means go and live on an island if you if you so choose for me i've
chosen not to do the puerto rico thing because the difference in net
worth for me makes no difference in my life because the difference
between having a hundred million dollars and 180

8 00:07:00.000 --\> 00:08:00.000 million dollars to me makes no
difference and so i got into this game because i wanted to have used
money to have freedom to do x y z right to live where i wanted to live
to do what i wanted to do with whom i wanted to do it right and so if
that is the goal of what the money is going to afford me i can't put the
money above the freedom and so if i have to remain prisoner of an island
for six months of the year in order to get my a better income tax rate
right then it seems like it's putting the cart before the horse for me
it's i'm i'm relinquishing the original objective i had and making the
path or the vehicle the objective rather than realizing that money in it
of itself has no value it only has value in so far as it allows me to do
things that i want to do and so if i'm forgetting that which many of us
do because the game is so enticing then i think that that is what makes
that more uh reasonable a lot of people end up rationalizing no you know
i love island living but i'll tell you what the reason that they give
you that four percent is because it's not that sick so for me i think
the easy thing me living in texas versus california the the living
lifestyle is the same for

9 00:08:00.000 --\> 00:09:00.000 me uh but i but i pay less fewer taxes
worth it makes sense to me living in puerto rico i'm relinquishing a lot
of freedoms there and i have to be there six plus months of the year and
for me that's very difficult with outages and and basically no stores
that are interesting and not a lot to do i'm not going to give up the
half of my life literally um so that i can get half more money on my net
worth because as much as people are like well that 40 is going to
compound well so is the other 60. and so again i think it makes sense if
you are if you were smaller and you were starting out and you're trying
to develop your net worth but i can tell you right now the vast majority
of your worth is going to come from the growth and none of that has to
be taxed and so if you play the game the right way which is the way the
ultra wealthy play they're not trying to think about all these little
hacks and codes that you see on the internet here it's really about
making sure that you understand the big rocks correctly which is buy low
immediately get value on your money for buying for less than what
something's worth when you sell it or don't sell it at all you can
continue to take loans against the increased value of the assets and you
can live off this rest of your life if you so choose and so these are
the tax strategies of

10 00:09:00.000 --\> 00:10:00.000 the ultra wealthy from someone who
actually is ultra wealthy i hope you found value in this video click
subscribe and i'll see you in the next bit bye
