Every so often someone asks me if “Tax Loopholes” are really legal, or rather, they’re more likely to ask if they can use them “wink wink” and really get away with them.

Granted … the name “TaxLoopholes” sounds like it might be something shady. But, in actuality, tax loopholes are anything BUT a scam.

A tax loophole is simply the government providing an incentive to promote public policy. If you want to see what the country wants to promote economically, just look where the tax breaks are.

For example, pre-1986 the tax rates were high, but the tax write-offs were even higher. I was just talking with one of the DKAffiliated CPAs about the high tax rates and how politicians today like to say something like, “At least our tax rate isn’t as high as it was during the Regan years.” But the reality is that there was a LOT more that you could write off, if you knew what you were doing.

Today, the business owners get the breaks. The new Economic Stimulus package gives a tiny rebate that the media likes to talk about and then gives business owners huge benefits.

So, what does the government want you to do? It seems like they are really clamping down on real estate investors and for that reason, I’m into the business building mode. Follow the tax loopholes … you’ll find a lot of tax breaks and even more reasons to turn your one business into many businesses with multiples streams of passive income for your business.