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|Subject: Re: The Bush Tax Cut||Date: 4/1/2001 9:37 AM|
|Author: telegraph||Number: 35218 of 789671|
Mr. X took in cash flow of $400,000 from his rental property. Income and Self Employment Taxes = $0
Mr. Y took in a net of $400,000 from his service business. Income & Self Employment Taxes = $172,441.
A lot of details is missing. Mr X had 'cash flow' of $400K....nothing said about income.....maybe accumulating 'net worth', maybe not....likely paying off huge debt, and taking gobs of depreciation. When he sells, then he pays the tax bills. How much leverage does he have, and how much risk? (if his tenants leave, or rental market rates go way down, or businesses go elsewhere, or there isn't enough power to keep industry going in his town?)
Mr Y had a 'net' of $400K, and we assume that is taken from profit. He is paying taxes now . He is not necessarily accumulating a massive future tax obligation.
Rich DAd, Poor Dad is very poor recommendation for sound financial planning. Then again, the author seemed to , after he and his wife were out of college for years, to be 'bankrupt' for the second time, and living in an old car, on the streets, for months and monhts, with barely enough money to buy food (and some of that mooched from friends), to finally have discovered 'financial success'....and that was selling advice on how to 'get rich'.....he got rich on selling 'how to get rich books'.....not on his business ventures, which ALL failed before that. Seems he really didn't learn all that much from his 'rich dad' neighbor. ONly then did he start investing in real estate with the PROFITS from his book and seminar selling ventures.
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