Legitimate Income
Legitimate income is expensive. Successful earners lose more than half of every dollar they earn. Learn how to legally keep more of what you earn. Play by the rules, but control the terms.
Much of what is earned as income comes from the creation of value, with more value created typically resulting in higher income derived. Insanely great value creation can generate insanely high income. That is generally pitched as the "American Dream" or at the least the goal...to EARN a high income. The reality as you quickly learn along the way to high income is that at first some, then more, then most of that income is taken from you. It is "redistributed" via progressive taxation.
The tax code is what it is; attempting to skirt or even worse deliberately running afoul of it has serious consequences. Yes there are thousands of people out there that never file tax returns and never pay income taxes. Many will never be caught. But the risks are severe, especially if you value your freedom.
Sadly, every American is born into serfdom as an indentured servant now, one way or another, with a Federal Deficit of nearly $40 Trillion Dollars as of April 2026. It is what it is; prior generations have overspent and saddled the next generation with even more debt. The debt compounds. The value of the dollar decreases. Taxation increases. This is the hand modern earners and investors have been dealt.
We have two choices: Feed the beast and relinquish more and more of your earnings, wealth, and soul to government that only grows in size and scope yearly OR become resilient. Keep reading if you would like to become resilient.
After decades of earning, building, and paying taxes (routinely to the point of extinction) some truths have become self-evident. First, to earn a decent living you need to create some level of value on a recurring basis, whether that is a service or physical good or a hybrid therein does not matter. Second, there are generally barriers to entry for the higher income professions; some are academic, some are skill, and some are family connections. To ascend the "value chain" of potential earnings and wealth one needs to leverage their own particular ambitions and skill sets. These first two variables we all have in common. The third variable is a conscious decision to become resilient.
Generally speaking, the greatest way, and by that it is meant the surest, fastest, safest way, to lasting wealth creation is to embrace a value creation and ownership mindset that is singularly focused on creating extreme value to sell, regardless of profession or industry. HOW that value is sold is critical.
To preserve and grow wealth it is vital not to LOSE some 50% of it each year to taxation. Taxation takes many forms; for our purposes it specifically relates to the Federal Income Tax, State Income Tax, Local & Municipal Taxes, Self-Employment Tax (as applicable), Social Security Tax, Sales Tax, Real Estate Taxes, Affordable Care Act Tax, and the additional associated costs of Medical Insurance & Education which most high earners pay out of pocket which act as additional taxes. All those taxes provide significant drag to advancement in life...like running a marathon with a parachute on your back that grows larger with each mile run!
Here at ILAF we like to tell it to you straight. If you want to achieve markedly higher wealth, consider implementing the following strategy ASAP: However you decide to create extreme value and sell it, consider doing it within your own company. Extract the minimum income needed to pay for your living expenses outside the business. Some would advise earning enough to contribute to a 401k, SEP, IRA, etc. The upside is you are creating tax-free or tax-deferred retirement savings, but you are also creating "tax bombs" that will be large liabilities down the road (except for your tax-free Roths.) Conventional wisdom suggests paying out value in the terms of income and then using a chunk of that income to build retirement savings. A more recent approach pioneered by the authors of the largest tax break in existence is to SELL your business every 5 years under the QSBS rules.
In every time and every generation in America there is a profession that has preferential status; ie the tax code bends its knee to that sector. For the first 150 years of America it was the farmer, rancher, and miner. Next came the oil man and manufacturer. Then we saw the rise of the professional class; lawyers, doctors, and engineers. Now the country is lopsided to the service sector and corporate behemoths. Most recently though, the rise of AI has resulted in small teams creating vast wealth (for themselves and early investors) via the promise of creating insanely great value.
We all need to press our respective EDGE. Not everyone is an AI vibe-coder, but every profession and career has its distinct advantages and disadvantages. Almost all forms of work offer a "best case" scenario where you can harness the power of the tax code to your advantage. Consider your skill sets and value proposition in the creation your own personal "Edge Fund."
It is hard to get ahead and create wealth when that yearly nut gets nibbled on by every tax squirrel in the forest. Look to store and secure your nuts. Take what you need to survive, but consider strategically selling your stash only when needed...and when advantageous to you and your family. Play by the rules, but control the terms.
