Taxes are, for most working people, the single biggest expense of their lives, and yet very few people think about them in any depth. In this clip from her 2019 London Real interview, Rich Dad co-founder Kim Kiyosaki explains how she sees the tax system, why she believes employees pay the most, and why she thinks people need to question the headlines they read about money.
The conversation starts with financial advisers and widens into capitalism, outrage and financial education.
▶ Watch the full episode: Kim Kiyosaki – Rich Woman: What Financial Freedom Really Takes
Are advisers on your side?
Brian Rose asks what she thinks of financial planners. Kim says she knows good ones, but the key question is whether they are there to grow your money or to earn fees. A friend who worked as a planner told her that sales targets could push clients into products whether or not they suited them.
Her test is simple: is the adviser investing their own money in what they recommend? She also tells a story about a stockbroker neighbour who talked her out of selling Coca-Cola shares at a profit, and the shares then lost money. Her lesson: only invest in what you are willing to study yourself.
Taxes as an incentive system
On taxes, Kim’s view is that employees and the self-employed pay the highest rates because they have few deductions to offset their income. Business owners and investors pay less, she says, and the reason comes from her tax adviser Tom Wheelwright: taxes are an incentive system. Governments offer tax breaks to people who do things the government cannot or will not do, such as providing housing or exploring for energy. In her words, “we are investing in things the government wants us to invest in.”
Brian adds that most people don’t notice how much tax they pay, because it comes out before the money reaches their account. Kim’s reply is that this is really an incentive to invest in assets.
Employee mindset, investor mindset
Every employee can also be an investor, Kim says, but she warns against bringing an employee mindset to investing. Someone used to safe, secure income tends to look for the same thing in investments, and may need to shift their thinking if they want to invest in property.
Capitalism and manipulated outrage
Brian raises news stories about wealthy people and corporations paying little tax. Kim argues that someone running a business that employs a thousand people creates jobs and products, yet public attention goes only to the tax bill. She agrees there is a lot of greed in business and on Wall Street, but hopes to see a shift towards what some call conscious capitalism.
Both see the media as part of the problem. Kim describes “manipulated outrage” as a major trend, and Brian calls attention “the new currency.” Her advice, from a lesson her mother taught her at nine: “Question everything.” Check the source of an article and ask what the truth really is.
What to take from it
Whatever your view of tax policy, Kim’s practical points are worth noting: understand how your income is taxed, ask whether advisers have their own money at stake, and read past the headline.
This video is for information only and reflects Kim Kiyosaki’s views, mainly about the US tax system. It is not financial, investment or tax advice. Speak to a qualified professional about your own situation.
Who is Kim Kiyosaki?
Kim Kiyosaki is an entrepreneur, real estate investor and author, and co-founder of the Rich Dad company with her husband, Robert Kiyosaki. She began investing in property in 1989, and is known for her advocacy of financial education for women through books including Rich Woman and It’s Rising Time!
This clip comes from her 2019 London Real interview, Rich Woman. She returned in 2023 for Always Pay Yourself First.
See everything Kim Kiyosaki has done with London Real on her guest page: Kim Kiyosaki on London Real.
More on London Real
Transcript
Transcript: Kim Kiyosaki – What You Need To Understand About Taxes
0:00 Brian Rose: You mentioned financial planners earlier as a way that, in the past, some friends of yours have kind of lost track of their money. How do you feel about financial advisers and financial planners?
0:12 Kim Kiyosaki: I know one good one. I do.
0:15 Brian Rose: It’s not you, is it?
0:16 Kim Kiyosaki: It’s not me, no. It’s a friend of ours. He’s very much aligned with the Rich Dad philosophy. And even he will say most people who come to him say: yes, yes, I’m going to do this, of course I’ll stick to this plan. As soon as they walk out the door, they do nothing. Too often, people come to him when they’re in their sixties and seventies, and there’s not a lot he can do for them.
0:45 Kim Kiyosaki: I’m not saying all financial planners are bad. I know there are really good ones out there. I guess the question is: are they there to really help you grow your money, or are they there to take fees for themselves? A lot of financial planners are salespeople. I learned this from a friend of mine who was a financial planner. She told me how it works in her industry: they had these different buckets, and at the end of the quarter, if you didn’t have enough clients in one bucket of products, you had to put everybody in there, whether it was in their best interest or not.
1:22 Kim Kiyosaki: So my question with financial planners, and this goes for stockbrokers and real estate brokers too, is: if they’re going to recommend an investment to me, are they also investing in it? Our stockbroker never recommends anything, and we don’t have much money in the stock market, but he’ll never recommend a stock that he hasn’t also put his money into. If they’re putting their butt on the line, then I have a little more interest in listening to what they have to say.
1:54 Brian Rose: But ultimately, they’ll never look after your money the way you would.
1:57 Kim Kiyosaki: No, never, never, never. I still remember, early days, we had this neighbour who was a stockbroker, and he said: oh, you’ve got to buy Coca-Cola. So we bought some Coca-Cola years and years ago. I’m watching it, and it’s made a nice little profit, and I want to sell. “No, don’t sell it. It’s going to do this and it’s going to do that.” And I let him talk me into keeping it, and we lost money on that. I’m just not a student of the stock market. I don’t want to be. If I’m going to do an investment, I need to be a student of that investment. As entrepreneurs, we’re learning every day, studying new things every day. So whatever I’m going to put my money and my time into, I’ve got to be an avid student of it.
2:48 Brian Rose: Good advice. All right: taxes. What do people need to understand about taxes? I think a lot of people have a weird impression of taxes, maybe the same as money: who should pay and who shouldn’t pay, and what you do about that. So educate us.
3:06 Kim Kiyosaki: Nobody likes paying taxes. But I have heard people say: I’m happy to pay a lot more in taxes, because that means my income is bigger. I don’t have a problem contributing money to my country, but not when they’re spending it and wasting it and not using it the way it should be used. In the world of taxes, unfortunately, the people who pay the highest taxes are employees and self-employed people, because there aren’t many deductions they can take to offset their income.
3:53 Kim Kiyosaki: The people who benefit are business owners and investors, who pay a lot less in taxes. And the reason, as our friend Tom Wheelwright, our Rich Dad adviser on taxes, says, is that taxes are just an incentive system. The government will give you tax incentives if you’re doing things the government cannot do. When we buy apartment houses, we’re providing housing. The government can’t provide housing, not a lot of it. When we invest in oil and gas, the government is not going to look for new energy supplies. So we are investing in things the government wants us to invest in, and by doing that, we get tax advantages.
4:38 Kim Kiyosaki: People don’t understand that. They think if you make a lot of money, you should pay the bulk of taxes. Well, I don’t know the statistics exactly, but the people who make the most money pay something like 95% of the taxes in the US. How does the saying go? In the US, the people complain that the people who pay the most taxes don’t pay enough, and the people complaining don’t pay any taxes. Something like that. Unfortunately, the government doesn’t know how else to make money except by taxing people.
5:29 Kim Kiyosaki: In Honolulu, for example, we have property, and we are not residents of Hawaii. A few years ago, we got a notice saying they’d just passed a law: because you’re a non-resident and you own property, we’re tripling your property taxes. They don’t know what else to do. So I think the most important thing about taxes is: it’s not rocket science, but if you’re an employee, there’s not a whole lot you can do, and you’re going to pay that tax bill. If you become an entrepreneur, even in the self-employed quadrant, there are still tax deductions you can take. But business owners, and investors especially, have the greatest tax breaks. And again, it’s because you’re investing in things the government wants you to invest in.
6:13 Brian Rose: And taxes are the single biggest expense for most people in their lives.
6:17 Kim Kiyosaki: Yes.
6:18 Brian Rose: And they don’t realise it. You get this printed receipt at the end of every month, and you think: it seems like a lot of money, but I’ve got $2,000 in my bank account, I’m going to go spend it. But you don’t realise that is the single biggest expense: more than your mortgage, more than your food, more than your kids’ tuition. The government’s taking that.
6:35 Kim Kiyosaki: Yes. And that’s an incentive to get you to invest in assets, is what it really is.
6:43 Brian Rose: Yeah, that’s a great point. But if you choose not to, that’s your choice. A lot of people are saying: I’m going to buy this property, and I’m going to have tax deferrals or tax advantages, and I’m providing this service that, by definition, the government wants me to provide. That’s why the tax break is there.
6:56 Kim Kiyosaki: Right. And that’s a great point, Brian, because every employee… I remember the first time I got my paycheque: what’s all this stuff taken out? Oh my God. But every employee can be an investor. Every self-employed person can be an investor. If you’re going to be an investor, just watch that mindset, because if you bring an employee mindset to the world of investing, it may work against you. An employee wants safe, secure income, so they will probably invest in a secure investment. So just be aware of that. If you’re an employee with that employee mentality and you want to invest in property, you might need to make some shifts in your thinking.
7:46 Brian Rose: Right. And about people who complain that some people don’t pay taxes: I was talking to Robert about a big article in the New York Times about how Jared Kushner had not paid taxes because he invested in a lot of property. And these days we see big corporations around the world not paying taxes here and there. What should people think about that stuff?
8:03 Kim Kiyosaki: Well, they wanted Trump to reveal his tax returns. The average person would have no idea what that tax return means, because, again, there’s a mindset that if you make money, you should pay a lot of taxes. In Europe there are countries with, what, 70% taxes and things like that. So I think people just need to understand that. Let’s talk about somebody who owns a big business and employs a thousand people. That person’s creating jobs. That person is creating products that are bought and sold. That person is paying taxes. That person’s doing a lot of good in the country, but all people can see is that they’re not paying taxes.
8:57 Kim Kiyosaki: So there’s got to be a shift. Right now, capitalist is a four-letter word. And I do agree there’s a lot of greed in business today, and a lot of greed on Wall Street especially. But I would love to see a shift, and it’s starting. I’m seeing a few people talking about moving from just capitalism to conscious capitalism, social capitalism, where it’s not about the money so much as it’s about doing good. We were listening to the co-founder of Whole Foods talking about conscious capitalism. He says people blame capitalism for all the social ills of the world, and that’s not fair: we’re trying to do good work, we’re putting people to work, we’re giving them jobs, we’re creating products that are used by citizens.
9:53 Kim Kiyosaki: So I think it’s almost like people are being brainwashed into thinking business is bad, business people are bad, capitalism is bad, Wall Street is bad (and Wall Street in a lot of ways is bad), investing is bad, landlords are bad. There’s this polarity happening, and I’m not sure how to correct it, if you have an idea on that.
10:21 Brian Rose: I just think sometimes there are these weird, clickbaity news headlines that get us into an “us versus them” mentality, which feeds into the whole system that never teaches you about money in the first place. I don’t necessarily believe in conspiracy theories, but I do believe people like the status quo. Most people are interested in keeping the status quo the way it is. You could teach kids about money in school, but it might mess up all these other things: employees and the mentalities and so on. So instead they throw out a headline: oh, look, this company didn’t pay tax, or this Wall Street banker got paid this, without diving in deep and asking what’s going on here.
10:59 Kim Kiyosaki: Yeah. Well, people don’t read past the headline. As a matter of fact, I was talking to one company about the unobvious trends happening, and the number one unobvious trend was manipulated outrage. It’s the media, it’s social media. Just as you say, these horrific headlines get you all riled up on the internet: if you like this article, we’ve got 10 more that are worse. So they are creating this polarity, and getting people very upset and angry about business, about money. It all goes back to this: people need to be educated about money and understand what money is about, and not just how to manage it, but how to grow it.
11:45 Brian Rose: We’re in an attention economy right now. It’s all about attention. Attention is the new currency, and people want to grab it from you. If they can get you to spend an hour on Instagram and an hour on Facebook and an hour being angry at the rich people or Wall Street, they just made money. And there are multi-billion-dollar companies in Silicon Valley that are really good at it right now.
12:08 Kim Kiyosaki: Yes, they are.
12:09 Brian Rose: You need to just check yourself every time you react to a headline. First of all, while you’re reading that, maybe you should be building a business. Whenever I see that headline about Kushner not paying taxes because he’s investing in real estate, I always think: well, maybe I should be doing that. So I really think people need to have a fundamental question with themselves about money.
12:28 Kim Kiyosaki: They need to question what they’re reading. When I was nine years old, my mom said: Kim, if you don’t want to spend your life in the kitchen, don’t learn how to cook. This was before computers: and if you don’t want to be a secretary, don’t learn how to type. She was really saying: don’t go with the status quo of what a woman should do. Question everything. That’s what I would say, and that’s just what you’re saying. As you’re reading these headlines, question. Number one, what’s the source of this article? And what’s really the truth about it? I heard that today the average person’s attention span is less than eight seconds.
13:04 Brian Rose: Same as a goldfish.
13:06 Kim Kiyosaki: Yeah. So people don’t take the time to really understand what’s going on. It is all about education, financial education. It’s why you do what you do. It’s why we do what we do. And just a little education can go a long way.
