In Economics 101, there are three things a person can bring to market.CapitalMost students, even ’A’ students, go to school to learn a trade and sell their labor.They go to school to get a job.Few students go to school to learn to sell or develop their property or sell their capital.A progressive income tax applies to the E and S quadrants with those in the S quadrant paying the highest percentages.In the E and S quadrants, the more you earn, the more you pay in taxes.In the B and I quadrants, percentages go the other way.The I quadrant pays the least in taxes.On the right side, the more you earn, the less you pay in taxes.Again, the difference is that people in the E and S quadrants sell their labor.People in the B and I quadrants sell their property and capital and hire labor.You may recall from Rich Dad Poor Dad that rich dad’s lesson #1 is, ’The Rich Don’t Work for Money.’When parents say to their child, ’Go to school and get good grades so you can get a good job,’ parents are advising their child to sell their labor, to work hard for money.In high school, every time my grades were low, my teacher threatened, ’If you don’t get good grades, you won’t get a good job.’ I would say, ’Good.I don’t want a job.’ In economic terms, I had no plans to sell my labor.This does not mean the rich do not work hard.They just work hard for something else.The Government Needs HelpThe government needs a lot of help so it offers tax incentives as stimulus packages to those in the B and I quadrants.These are legal government tax loopholes.The following is a snapshot of my personal balance sheet.My StorySince 1973, I have worked to create or acquire assets that sell property and capital.I have not wanted a job selling my labor.I will describe, as simply as possible, the loopholes I use.The tax code offers me tax incentives to provide jobs.The more jobs I provide, the more I can make and the less I pay in taxes.From the government’s perspective, the more people working the more government is collecting in taxes.The tax code wants me to provide housing.The more housing I provide, the more money I make and the less I pay in taxes.One advantage of real estate is debt.And, today the dollar is debt.If I stop borrowing, the economy slows.That is why the government wants me to get into debt.That is why interest rates on debt have continued to go down during the financial crisis.The deeper in debt I get, the more money I make and the less I pay in taxes.While stocks are good for most people, I do not invest in stocks.While stocks have made a few people very rich, they have also made many people poorer.When you invest in stocks, you place your money with employees and managerial capitalists, rather than entrepreneurs, or true capitalists.The primary reason I choose not to invest in stocks is simply because there are not enough tax incentives and far too much risk for me.I invest in oil production, not oil company stocks.The more money I make, the less I pay in taxes.One track is a circle called the Rat Race.People in the Rat Race invest in stocks, bonds, and mutual funds.The second track on that same game board is the Fast Track.In real life, there really is a Fast Track.The Fast Track is where the rich invest.On the Fast Track, investors choose more sophisticated investment vehicles like Limited Partnerships and Private Placement Memorandums.This is where I chose to invest my money.The advantage I have is I know the entrepreneur, a true capitalist who is the founder of the company as well as the person who runs the company.When I invest as a ’partner,’ the entrepreneur will take my call.Simply said, stock holders invest in shares of a company.Most public companies have millions of shares.A partner invests in percentages of the company.In many cases, partners receive tax breaks.Shareholders do not.I have only listed the ones I use.There are many other tax incentives.Before investing for tax incentives, always, always seek professional advice from tax accountants and tax attorneys.Who Pays the Highest Taxes?The more they earn, the higher their taxes.It all depends upon your point of view.First of all, the money your employer supposedly gives to you is your money anyway.He did not donate it.He just did not pay it to you, and then he let’s you think he is giving you extra money.Second of all, the reason financial planners say, ’When you retire, your taxes will go down’ is because most people plan to retire on less money than they earned prior to retirement.If you follow that kind of financial education, you will turn your children into tax slaves for the rest of their lives.They will work for capitalists, trading time for money, rather than becoming a capitalist.Tax Education for Your KidsMillions of people believe in the principle of ’taking from the rich and giving to the poor.’ This is the basis of taxation.This is also the basis of the Robin Hood theory of economics, also known as socialism.All bonds are debt, and all debt comes with a percentage of interest paid with the repayment of principal.Keeping the numbers simple, if a government offers a bond for $1 million and the interest is 10 percent per year, then someone has to pay that $100,000 a year in interest.In many cases, that person is you or me, taxpayers.Today, an increasing percentage of our tax dollars are flowing to banks and countries such as China, creditors that hold our debt and expect to be repaid.Inflation goes up when governments print money because that new money dilutes the existing financial pool and the result is that the purchasing power of the dollar goes down.You can look at the chart of gold pictured below to gain some idea of how much money the Federal Reserve has been printing.This is what happens when the Fed prints more money.The problem is, the more he attempts to tax the rich, the more the poor and middle classes will pay in taxes.As inflation increases, incomes will move up.While the President will score a few victories, the fundamental principles of capitalism will hold.If you only do things to evade paying taxes, the government will come after you, as they should.Solyndra, Obama’s darling, could not produce solar panels.Why is government housing some of the most dangerous housing in the world?Postal Service going out of business?Why is Medicare corrupt, expensive, and inefficient?Why are our governments going bankrupt?Why are our schools failing to educate our children with the information they need to make responsible and smart choices with their money?If the government took over the airlines, would you continue to fly?That’s one of the reasons why governments offer tax incentives.Action Step for ParentsRich Dad LessonTaxes are your single largest expense.True financial education must include lessons on taxes, who pays them, and why some people are offered tax breaks.Teach your child to look at taxes from two points of view.While it’s true that taxes can make some people poor, they can also make others rich.It’s a matter of point of view.The rich see taxes as an incentive program that the government offers businesses and individuals that do work that the government wants or needs done.Other conversations and learning opportunities related to taxes can be explored when you child is old enough to understand that you file a tax return in each year.Also point out the section that details deductions.Also show your child a pay stub or summary of the deductions from your paycheck.I encourage you to teach your child the three sides of the coin of taxes and help them to understand the differences.’And the Word became flesh and dwelt among us.’ – John 1:14Words Become FleshIn real life, words do become flesh.It’s said that ’what you think about you bring about.’ I believe that the same is true for what we say and the words we use.Favorite words of poor people are, ’I can’t afford it.’ Rich people say, ’How can I afford it?’ Simply said, if you want to change your life, change your words.Rather than teach kids the language of money, schools focus on the language of schoolteachers, a language that uses words such as verbs, calculus, nouns, history, chemistry, and physics.Those words are important, but they fail to prepare students for the real world of money.’The difference between stupidity and genius is that genius has its limits.’This financial crisis is a crisis of unlimited stupidity.’Sticks and stones may break my bones, but words will never hurt me.’Nothing could be further from the truth.Few things affect a child’s future more than words.Words are incredibly powerful.Words can hurt