A few weeks ago our 14-year-old daughter ordered a $30 item online with her own hard-earned cash. She was proud of herself—until a notice popped up: the product was coming from overseas and a tariff of roughly $30 would be due at delivery. She looked at me, stunned. “Wait… I have to pay double to get it?” She paused, thought, and said, “I still want it.”
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That tiny moment shows a big reality: taxes aren’t just something you deal with in April. They show up everywhere, often without warning, and every one of them is a leak in your wealth bucket. It’s also a simple picture of why taxes and wealth creation are tied together in ways most families never see.
The Real Link Between Taxes and Wealth CreationTaxes and wealth creation: Why taxes are the biggest wealth leakThe compounding cost of taxesTaxes and wealth creation: 95% of the tax code is about how not to pay taxes“Is this deductible?” vs “How do I make this deductible?”Taxes and wealth creation: Tax planning is not tax preparationTaxes and wealth creation: The SECURE Act and a silent inheritance taxThe 10-year inherited IRA ruleTaxes and wealth creation: Roth conversions as a legacy moveTaxes and wealth creation: Positioning money where compounding can keep workingReal estate incentivesCharitable givingWhole life insurance for tax-efficient legacyTaxes and wealth creation: Thinking past your lifetimeHere’s the point: taxes and wealth creation rise and fall together.Book A Strategy CallFAQWhat is the connection between taxes and wealth creation?Why do taxes feel invisible to most families?What did the SECURE Act change for inherited retirement accounts?Are Roth conversions a good strategy for generational wealth?How does real estate help with tax-efficient wealth building?Why is tax planning different from tax preparation?How does whole life insurance fit into tax-efficient legacy planning?
The Real Link Between Taxes and Wealth Creation
This topic matters because taxes quietly take more from most families than any other expense. Not your mortgage. Not your lifestyle. Taxes.
In this article we’re going to pull taxes out of the “yearly chore” box and put them where they belong—in the center of your wealth plan. You’ll see why taxes are such a drag on compounding, how the tax code rewards certain behaviors, what the SECURE Act changed for retirement accounts and heirs, and why Roth conversions and other strategies can protect wealth for your lifetime and beyond. The goal is simple: help you keep more dollars in your control so they can grow and bless your family for generations.
Taxes and wealth creation: Why taxes are the biggest wealth leak
Most people think about taxes as a single event: file your return, see if you owe or get a refund, and move on. But Bruce made a point that changes everything: we pay taxes on almost every transaction. Federal and state income taxes are just the obvious ones. Add sales tax, gasoline taxes, property taxes, and the taxes baked into your phone and internet bill—and the true cost is enormous.
Even when you don’t see it, you pay it. And the dollars you lose to taxes don’t just disappear today. You lose what those dollars could have become after decades of compounding. Once money leaves your control, the future of that money is gone forever.
The compounding cost of taxes
I love pictures, so here’s one we used. Imagine your money as water in a five-gallon bucket. If there are leaks in the bottom, you don’t arrive anywhere with a full bucket. Taxes are one of the biggest leaks. You can earn more and work harder, but if you don’t seal the leaks, your progress is always slower than it should be.
Think about the penny-doubling example. A penny doubled daily for 30 days becomes millions, but for the first week it still feels tiny. That’s why people underestimate compounding. Taxes interrupt that curve. They pull dollars out before they ever reach the steep part of growth.
Wealth isn’t only about what you earn. It’s about what you keep and control long enough for compounding to do its job. That’s why taxes and wealth creation are inseparable.
Taxes and wealth creation: 95% of the tax code is about how not to pay taxes
Bruce shared something that shaped his whole view. A former IRS auditor once told him: only about 5% of the tax code explains how you pay taxes. The other 95% explains how you don’t have to pay taxes.
That surprised me at first, but it’s true. Congress uses the tax code to steer behavior. If they want more housing, they reward people who provide housing. If they want investment in certain industries, they create incentives there. The incentives exist on purpose. If lawmakers didn’t want people to use them, they wouldn’t be written into law.
“Is this deductible?” vs “How do I make this deductible?”
Tax strategist Tom Wheelwright says the wrong question is, “Is this deductible?” The right question is, “How do I make this d