♪ California's top casino and entertainment destination is now your California to Vegas connection. Play at Yamaha Resort and Casino at San Manuel to earn points, rewards, and complimentary experiences for the iconic Palms Casino Resort in Las Vegas. ♪ Two destinations, one loyalty card. Visit yamaha.com/palms to discover more. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insights, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

My name is Josh Rasheeds, I am your host. Today we're gonna talk about taxes as we continue our tax series here at Radical Personal Finance by specifically focusing on this question. How should you prioritize taxes, the cost of taxes, your tax savings, in your personal decisions? Should it be your number one factor?

This is the thing, I'm gonna move to Florida because I don't have to pay any state income taxes, or I'm gonna move to the Bahamas so I don't have to pay any income taxes. Should it be in the middle? Okay, this is nice to have. Or should it be at the bottom?

This is just something that doesn't matter whatsoever. I'm gonna talk about that. And I'm gonna tell you not the answer, because of course I can't deliver on the actual answer. What I'm gonna give is I'm gonna give you a model that you can use to think about your own situation.

Because here's my answer. How should you prioritize taxes? Well, you should simply make an examined decision. This is one of those things where you and I could come to the same set of decisions and walk away making completely different choices because of our personal factors, things that you look at, that I look at, that we think matter to each of us.

And so they'll be different for you than for me. The only wrong decision in my opinion is an unexamined decision. And all examined decisions are right decisions. So let me give you a simple model. It's got five steps, very, very simple. Number one, calculate the actual tax liability of a certain decision so you actually know the numbers.

Number two, calculate other costs and benefits of your decision, both financial and non-financial. Consider and calculate the opportunity costs of your decision. And then next, most importantly, think creatively about your options and look for a third path if one exists. Look for the win-win. And number five, make the decision that seems best to you based upon the personal factors, not just the tax factors.

I'm gonna give you a number of examples here as we walk through these steps in detail. But I genuinely believe that you can use this as a decision-making model and make a smart decision for you and your family if you'll simply walk through these questions. Let's begin with this.

Let's pretend that you can live totally tax-free. By the way, I'm gonna actually give you a model to live totally tax-free or as close to totally tax-free as is possible on this globe we call Earth, okay? There is a place in the world, at least one, probably more, but there is at least one place in the world that you can live where there are no income taxes.

There's no tax on your income. There's no employment tax system. There is no capital gains tax system. There are no income tax systems. And what's more important and more impressive, not only are there no income taxes, but there are none of the other tax systems either. There's no property taxes.

There are no sales taxes. There are no sin taxes on this place. And here's what's even more amazing. Not only are there no taxes, but you can actually genuinely be given land to live in this place. You don't even have to buy land. You might have to buy materials to build your house, but you don't have to buy land to live in this place.

It's a sovereign place, a sovereign country, and it has all of these factors. Now, the name of this place is Pitcairn Island. Pitcairn Island. Perhaps you've heard of it. It's a group of four small volcanic islands in the Southern Pacific Ocean. They form the sole British overseas territory in the Pacific Ocean.

These four islands, Pitcairn Proper, Henderson, Ducey, and Ono, are scattered across several hundred kilometers of ocean. They have a combined land area of about 18 square miles, very important. The largest country, the nearest country to the Pitcairn Islands would be French Polynesia, found at a distance of 1500 miles, followed by the Cook Islands, 2000 miles away.

New Samoa, Tonga, let's see, Chile, would be the next closest big country that you might be familiar with, 3375 miles away. And going down the list, it continues. The point is that Pitcairn Island is in the middle of nowhere. So while you have all of these benefits, no taxes, they'll give you land if you come be there.

Oh, and by the way, the population is something like 40 to 50 people who live there, total. So you genuinely do have all these options. And you could live there. Maybe you're an internet billionaire, right? A Bitcoin billionaire. And you can move there. You can set up a nice satellite dish to get your satellite communications.

Maybe you can get your email over HF radio. And so you can genuinely move to Pitcairn Island. Would you do it to have no tax liability? Would you make taxes your number one thing and move to Pitcairn Island? I would say with almost total certainty, of course you wouldn't, right?

I'm not going to do that. I have zero interest in moving to Pitcairn Island. Visiting, yes. Moving there, zero interest whatsoever. I'm not going to move to Pitcairn Island to get free land and no tax. It's just not worth it. So I think we can start by saying we would all agree that taxes are not our sole decision-making criteria.

But how important are they genuinely? Well, you don't know until you do step one, which is start by actually calculating the numbers. The numbers here matter. And if you're going to make a good decision about this, you need to actually calculate the cost of a tax liability. And this is something that almost none of us are even capable of doing.

It's hard for me. I am a certified financial planner. I have a master's degree in financial planning. I'm a chartered financial consultant. I have all these other degrees and designations that say that I should know how to do this. And I still have a very difficult time sitting down and actually tracking the total taxes that I pay and actually knowing the cost of any particular move.

It's very difficult. But you want to start with as close to correct numbers as you can. If you're thinking about buying a house in a certain county, you need to know what is going to be the property tax of that house. Sometimes this makes a big difference. Where I used to live in South Florida, I used to live fairly close to the county line between Martin County and Palm Beach County.

But there's a big difference in property tax assessment rates between Martin County and Palm Beach County. And there are all these interesting little communities that you have no idea whether you're in Palm Beach County or Martin County, but your tax assessor does. And if you're just thoughtful about which particular house you buy, you can potentially over the course of the decades you might live in that house, save thousands and tens of thousands of dollars in taxes because Martin County has a tax rate, I think about half of what Palm Beach County taxes and imposes, right?

There are many places in the world that you can live in a certain country where you can live right on a state line. And on one side of the state line, you pay no state level income taxes. On the other side of the state line, you pay a lot.

Classic example here would be, I think, a place like Lake Tahoe, Nevada, Lake Tahoe, California. Same town, state line runs right through it. But if you live on one side of the state line, you have no state income taxes. You live on the other side of the state line, you have high state income taxes.

And the property values and property prices often reflect this. But you wanna actually know the cost. Many years ago, when I was working as a professional financial advisor, I had a client of mine who was offered a job in North Carolina. She was a pharmacist living and working in Florida.

Her husband was a physical therapist and she had been offered a job in North Carolina. So we were talking about whether she should take the job. And of course we had the salary figures for both jobs. We had the job offer. First thing that I did though, was do a quick assessment of what her cost of state level income taxes would be in California.

Of course, her federal income taxes would be the same in both places, but her state level income taxes were about a 5% rate. North Carolina poses about a 5% little over, mostly flat tax system on their income. And so I calculated, all right, if you move from Florida and you have your combined household income of X number of dollars, now we take X times 5%.

This is gonna be a cost of your moving to North Carolina. So you need to know that. Now, knowing it doesn't mean that you make a different decision. Knowing it may just mean, all right, well, I use it for negotiations. Hey, I'd like to take this job offer in North Carolina, but if I move from Florida, North Carolina, I have to start paying state level income tax, I need a higher job offer.

Or maybe another thing that you're doing, you're currently working as a contractor and you're trying to consider whether you should go and take a job as an employee for the same company that you contract for. And they're making you a job offer. Well, you need to calculate. What are gonna be the tax consequences of that decision?

So you sit down, you calculate it as much as possible. And at the very least, you use it as a negotiating bargaining chip. Might go the other way. You're an employee and you're trying to think about becoming a contractor. Well, sit down and calculate the actual numbers. Because until you have some actual number to go by, you don't really have any starting point other than just an emotional guess.

And you may be surprised at the number. I would bet you very well were probably surprised at some of the numbers that I shared in the most recent episode of Radical Personal Finance. When I shared how I, as a father of four children, I could live in the United States and basically earn $100,000 per year and pay $0 of federal income taxes living in the United States.

Pretty cool. Right, I was a little surprised when I sat down and calculated the numbers again. And by the way, I didn't include, all I included was the child tax credit. That was basically it, right? The tax liability on $100,000 of income was like $8,243, something like that. And the child tax credits with four children, $8,000 child tax credit, boom, wiped out my tax, the federal income tax liability.

So you wanna calculate the estimated tax liability of a certain decision. Number two, you need to calculate other costs and benefits of your decision. Let's start with some financial examples. When you're looking at tax savings, there's all kinds of interesting ideas. I have a friend of mine who refuses to have a new boat.

In the state of Florida, if you have a boat that is 30 years old or older, and if that boat is used for recreational uses, and if the whole boat matches, meaning the powertrain of the original boat is basically the same type of powertrain that the current boat has, then you can actually be exempt from the annual state registration fees in the state of Florida.

So you don't have to pay the annual tax for your boat ownership. So my friend likes saving money on taxes, and so he buys antique boats, has antique boats, and pays no tax on his annual registration fees, which is cool, cool for him, right? But what's the problem from my perspective?

Well, you need to calculate the other associated costs. So for me, when I think about owning a 30-plus-year-old boat I get really concerned about the costs of maintenance. I get really concerned about the ability to find spare parts as easily if I had a boat that's five years old.

And to me, if there is a substantial difference there, I'd just as soon go ahead and pay the tax, which is a relatively simple, knowable number that all things considered is fairly low. I'd just as soon pay that annual registration tax and not have to pay higher maintenance costs on the older boat.

But that's me. My friend, on the other hand, does all of his own boat maintenance, doesn't have any problem finding parts, likes working on it, so he likes saving the money. Buys the old boat, saves his tax money, works on it himself, all good for him. But you wanna calculate what are the other costs and benefits of your decision.

I think here, though, some of the most important ones need to be played to things like career potential. Let's say that you're living in a place that's relatively unknown, Bahamas, okay? The Bahamas is very close to Florida, and the Bahamas is a place that does not impose any kind of state income taxes, sorry, country income taxes.

There's no, yeah, income taxes. They don't have any. Tax-free, tax haven, tax-free country, living in the Bahamas. But there are many, many Bahamians who will move from the Bahamas to Europe. They'll move to the UK. They'll move to Florida. Why? Well, frequently, it's so that they can gain access to a much bigger job market, have a much bigger career potential.

For some people, that's a benefit. For some people, it's not. Now, here's where I think you gotta get into the specifics of your situation. And you gotta ask yourself, what am I gaining by going from a place with low tax to a place of higher tax? What do I gain from being involved in that?

And there will be a very different scenario. I like to think of it like this. I imagine myself, let's pretend that I were Swiss, or I were a Brit, or I were, I don't know, German, right? I'm picking some of these Western countries, these brand names that you and I know, not necessarily low-tax places, but just some of these places where we recognize there is a strong economy in each of these countries.

There are lots of career options, lots of job options. I imagine myself, would I ever move to the United States? Unless I really loved the culture, or I don't know, I fell in love with a US girl or something like that, and I really wanted to live there, my answer is generally no.

I wouldn't wanna get involved with the United States. I'd rather just steer clear. I don't wanna go. I'd rather avoid it. Why? Well, because if I'm Swiss, or if I'm German, I can travel the world and I can gain access to the world's job markets in a far simpler way.

If I'm German, I can move to Hong Kong and get involved in the import/export business. I can move to Singapore and get involved in finance. I can move to Dubai and I can start a business there. I can move to any job market practically in the world. If I need a work permit in the United States temporarily, I'll go get a work permit in the United States.

But I'm not gonna have to deal with the complications of the United States that's gonna impose all these issues on me if I become a green card holder or a citizen of the country. On the other hand, if I'm living in El Salvador or Honduras, and I'm just a penniless campesino, living out in the country, and I notice that all of the fancy houses in town have a guy, have a husband or a father that's living in the United States and sending remittances back, I'm gonna be sorely tempted to do that.

If I'm a Filipino, I'm gonna be sorely tempted to go to Dubai and work. I'm gonna be sorely tempted to go, why? Because I gain access to a labor market that gives me more opportunities. I mean, it's to me very sad. I hate when fathers leave their families to go abroad to work for extended period of time 'cause I think it destroys the social fabric of the local community.

I think it destroys the families. I'm very opposed to it. But I also consider it understandable, right? You can go into a little town in the countryside in Guatemala, and I can drive you through the town, and I can ask you to make a guess of the 30 different houses, which of them have someone living in the United States, and you can point with perfect accuracy to those houses because the remittance money goes far.

If I'm living in the United States, I might be there. I might not have any work papers, no permits to work to be there, but I can still send 1,500 bucks a month back to my family in Guatemala, which is gonna help them to move up in society. So it's an understandable trade-off.

So the point is, what about the tax system in the United States? Well, if I'm already German, I probably don't gain much by getting involved in the US tax system. But if I'm from Guatemala or Honduras, and I don't have a lot of other job prospects, I probably do.

So you wanna consider things like that. Those are financial aspects. But you consider where you're coming from and the cost of getting involved in a high-tax country like the United States. You also consider other financial costs and benefits, such as government programs, right? Tax holidays you might get. So when a company is saying, "Hey, we wanna move to your state.

"Will you give us a tax break?" That company now can move to a high-tax state because the state says, "We wanna attract you, "so we'll give you a 20-year exemption from taxes." Well, that's powerful. There can be other financial benefits, right? A company like, I don't know, let's say that I were anointed as the CEO of Lockheed Martin.

Do you think that I would ever open my mouth and say anything that could in any way ever be misconstrued by anybody as the tiniest thing that was anti-US American in any possible way? CEO of Lockheed Martin knows where his bread is buttered. He's not gonna complain about tax.

He's not gonna complain about anything because he makes billions of dollars from the government every single year by selling them war machines. And so you wanna understand, where is your bread buttered? So if you're working for the government or something like that, then it behooves you very well to never open your mouth about taxes and not talk about going abroad, not set up some kind of foreign subsidiary to try to lower your global tax liability.

You wanna go ahead and make all the money you can 'cause you know where your bread is buttered. So it's totally fine for Starbucks to do it. Starbucks isn't making much money from the US government. It's not okay for Lockheed Martin to do that. So you wanna calculate, do I make money from this certain thing?

Do I have offsetting costs? But then think about your career options. I think this is a little more practical. If you wanna make money, you're gonna make money more easily by going to a big city and probably by living in a place with a bigger economy. San Francisco is not hurting.

New York City is not hurting all that much. They're hurting a little bit right now. Why? Well, because they offer so many opportunities to people that, and all around the world, it's the same trend, but you understand that it's much easier for you to build a global network that can really enhance your career in Manhattan than it is in St.

Augustine, Florida. It's just totally different. And so for people who are aggressive, who can take advantage of it, the taxes are just a cost of doing business. It's worth paying for. It's worth getting involved in because it opens up opportunities for you. So calculate the long run financial costs as much as you can.

Then calculate the non-financial benefits and lifestyle costs. Right, there are a lot of people who might move from the Bahamas to Florida and then realize that, you know, actually I like the lifestyle in the Bahamas better. And so the tax savings are just one component of it. There would be many reasons why you would choose a non-financial benefit because it's ways more to you than the finances.

Why am I not gonna move to Pitcairn Island? Well, I don't see what future my children have on Pitcairn Island. All right, do I really think that my children, if I moved to Pitcairn Island, do I really think that my children are gonna be established there and that we're gonna keep on the island?

Of course not, right? Who are they gonna marry? What are they gonna do? We're not villagers in that sense. Like we're not subsistence farmers. And so that's just not where we're gonna go. And so I'm not gonna go to an island in the middle of nowhere because of what it would do for my family and about their future prospects.

There could be so many other non-financial things that you need to calculate the costs and benefits. Let's say that you're affected by seasonal affective disorder, right? Sad, you get sad during the winter time. So you can live in a place that's low tax and be sad half the year, or you can move to a place that's high tax and be happy half the year or happy all the year.

Well, to me, I'd do that. I'd do that. There can be lots of other things, right? Maybe you face some kind of discrimination, right? In the place that you live. Well, if I face some kind of discrimination, I'll leave a place that's low tax where I can't get ahead or I'm hated for some innate characteristic.

And I'll go someplace that's higher tax where I can go ahead 'cause I can build a bigger thing. And these things really matter. They affect your lifestyle. They affect your quality of life. And what we want is quality of life, not the lowest possible tax bill. That's number two.

Number three, you wanna consider and calculate the opportunity cost of your decision, especially the long-term opportunity cost. I like to compare it in this way. Let's say that you are a 25-year-old man who's just graduated from, you know, you've graduated from university, you're getting a job, okay? You're not yet totally enveloped in the network of a local place.

You still have an opportunity. Wherever you go next, you can settle down and build good options for yourself. You can build a good network wherever you go. Well, you have a choice. You can pick New York City or you can pick Miami, Florida. These are not your only two choices, but they're two choices.

And I think they're good examples. You have these big cities that offer big city stuff, big city nightlife, big city environment. They have their good weather and their bad weather, right? Miami's hot in the summer and New York's hot in the summer. Miami's beautiful in the winter. New York is New York in the winter.

Beautiful in many ways. I like to go to New York in the winter. I like to go and do the ice skating thing and look at the trees. It's fun for about four days. But the point is that you have your options, okay? And so you're weighing these things and you're saying, well, if I live in Manhattan, I can generate X amount of dollars of income.

If I live in Miami, I can generate X amount of dollars of income. But I've got this pesky state and city level income tax. And let's assume that you do something that is equally valuable in both places. You're gonna make a good career in both places. This is interesting actually, is significant portions of the finance business have moved to Florida.

It's something I never expected years ago. It's kind of hard, but increasingly, right? The New York Stock Exchange is thinking, well, do we move out of New York? You can't even imagine the New York Stock Exchange, Wall Street without Wall Street. It's just so ingrained into us. But it's really interesting that the kind of the movements that you see right now.

But let's say that you're gonna pay $5,000 a year, just modest expectations, $5,000 a year of income taxes by living in New York versus $0 a year of living in Florida. Well, if you calculate the opportunity cost, what are you giving up with that? Maybe that $5,000 is just gonna be put into savings.

It's gonna be put into mutual funds or into, but we'll get to some exciting options. Let's say you're gonna put it in index funds. And so you can sit down and calculate and say, okay, $5,000 per year. That's gonna be my annual savings. And I'm gonna set up an annual Roth IRA contribution starting at 25 years old.

I'm gonna do this from 25 to 65 for 40 years. And I'm gonna put it in mutual funds at 7% per year. And I'm gonna start with nothing. So at 65, that decision to live in Florida is worth potentially $1,068,000. $1,068,000. So that's a million dollar decision. And if I get you early enough, and I say, listen, you can build a network in both places, then now it makes sense.

And I wouldn't tell the 50 year old guy who's got this deep business network and all his contacts in New York, I wouldn't tell him to move to Miami. But the 25 year old who hasn't built that network yet, might as well build it in a place that's efficient from a state income tax perspective.

Well, now let's say that you're in finance and let's say that you can invest in your own, your hedge fund you're working for. And maybe instead of 7%, maybe you could make 13%. Okay. Well, now all of a sudden, that's potentially a $5.7 million decision. So the opportunity cost of what you give up potentially compounds.

So you need a lot of benefits to choose the higher tax jurisdiction. What do you need? Well, you need the much better job prospect in New York than you can get in Miami. You need the industry that really only exists in New York than you get in the Miami.

Or you need substantial non-financial benefits like your family is in New York or your wife's family is in New York or your college network is in New York. You need those opportunities. You wanna consider them for the longterm. So think about the opportunity cost of your decision. What are you giving up if you make one decision versus another?

What would you invest that tax money in if it weren't into taxes? I've often made recommendations to people. Okay, when you're starting your business, go to the tropical MBA, right? Go to a low cost living place, go to Thailand or Vietnam or someplace like that and set up and then also do it tax efficiently.

Why? Well, because if you can live cheaply and whereas maybe your living costs in Chicago might be $75,000 a year, you can live an equivalent lifestyle for $30,000 a year. That frees up $45,000 per year that you can now invest back into your business. In addition, maybe you save a bunch of money on tax.

So instead of having $20,000 a year of tax that you would have in Chicago, you now have an additional $20,000 tax savings available to you by living in Thailand. So now go and build the business there and then compound the numbers. See how quickly that extra $65,000 invested in your business can set you free.

You may now be able to become financially independent in seven years instead of in 27 years because you went to Thailand. So calculate the opportunity cost. What do you give up? Would you rather be in the high cost, the high tax, high cost of living place and go with the 27 year plan or would you rather go to the low tax, low cost living place and potentially be on the seven year plan?

Some people would choose either one. Step four, think creatively about your options and realize that true win-win options might be available to you. In my opinion, this is probably the biggest opportunity where many people don't think creatively about their options. Let me give you an example, okay? About a month ago, a little under a month ago, I was watching Ramit Sethi.

Ramit is a personal finance author or a guru. He wrote a book called "I Will Teach You to Be Rich." Interesting guy, very smart, very smooth, very good communicators, built a really good business. Book is pretty good. And he thinks a lot about lifestyle. He's one who advocates for lifestyle maximization as I do.

I don't really disagree with, I don't disagree with much of anything that Ramit teaches. I don't know of any point of personal disagreement with him. I'm sure I could find him, but not an enemy of his. He's done a great job. But Ramit is an increasingly outspoken advocate of higher taxation.

He politically would align with more of a progressive left-wing political identity. He believes that taxes should be raised on the rich, as many people do, and he's quite vocal about it. He's also vocal about the fact that you should live the life that you wanna live. And so here's Ramit's tweet thread.

Guy on Reddit, quote, "I'm 27 male, $14 million net worth, "looking for a city to live in. "City must have one, good weather, two, be safe, "three, low capital gains tax," close quote. Ramit's comments. "Imagine being on track for $100 million plus net worth "by breathing oxygen, and of all your options in life, "you decide on taxes as a top criteria for where to live.

"There are two groups who make decisions based on taxes "that I find incomprehensible. "Number one, low earners. "I remember a guy making $14 an hour in Texas "telling me I was dumb for voting Democrat because, "quote, they'll raise your taxes. "Buddy, they want my tax money, not yours. "And they should raise my taxes.

"Two," the second group, "Two, the rich. "Okay, you're a multimillionaire, you can live anywhere. "You make 8% returns with capital gains advantages. "You literally cannot spend it all." I find that a total crazy statement, but he says, "You literally cannot spend it all. "Of all the things you can do in your life, "what guides you?

"How little you can pay in taxes?" Censored, get an imagination, okay? So this is Ramit's basic comment, is that taxes should not be the criteria. Oh, it continues, excuse me. "If Reddit guy wants to live in San Jose or Dallas, great. "But why would taxes be in your top three, "five, or 10 criteria?

"This dude will have hundreds of millions of dollars "in his lifetime. "This is the predictable endpoint of people "who have been taught that, quote, taxes are evil." So this is Ramit's thread. Now here's what I find interesting. We don't know if this guy is a US American or not.

Let's start with him not being US American. Actually, I'm gonna ignore him being US American, because the US tax rules are so ridiculous, it is worth thinking about, but I'm just gonna ignore that. So first of all, let's say this guy's a Canadian, right? 27-year-old male, living in Toronto, Canada.

$14 million net worth. He's looking for a city to live in. That city must have good weather, be safe, and low capital gains tax. Here's my question. If this guy were a Canadian, would you say to him, "Buddy, you absolutely have to go to San Diego, California, "because it's got good weather, it's safe, "and there are low capital gains taxes." Nonsense.

You might say, "Okay, it's got good weather, right? "This is what San Diego is known for, generally, "but there are lots of places in the world "that have good weather. "There are lots of places that are much, much safer "than San Diego, and there are places "where his capital gains tax could be zero." Now, we don't know what kind of income he's creating from a $14 million net worth, but let's just run, let's do our analysis.

Let's calculate the estimated tax liability of a certain decision. So this guy, let's pretend he's living in Canada. Let's say with, maybe he's got a million dollar a year income, $14 million net worth, but a million dollar a year income. So he's generating a million dollars a year of taxable income.

Let's say that his taxes are $400,000 per year all in, okay? Now, he goes out, and he calculates the tax liability. He also calculates other costs and benefits of his decision. He looks at the world, and he says, "I wanna live somewhere where there's good weather. "I wanna live somewhere where it's safe, "and where there's a low capital gains tax." So maybe he thinks about some of the classic winners, right?

Monaco. Beautiful weather, exceedingly safe, no capital gains tax, party town, right? Maybe he looks at some of the current places. He looks at Dubai, right? Sparkling city, maybe Doha or some other place if he wants something that's a little quieter. But he looks at a place like Dubai. Far safer than any place in the Americas.

No capital gains tax, good weather. Maybe he's beyond that. Maybe he doesn't, maybe he genuinely does just have capital gains. And so he looks at, I don't know, New Zealand, right? And he thinks, "Well, okay, Christchurch, Auckland, "safe, good weather, depending on what you're looking for. "No capital gains tax." And so his cost is $400,000.

You're trying to tell me, Rameen, that he shouldn't factor that in? Let's calculate the opportunity cost of that decision. Let's say that this guy is content spending $600,000 a year, 50,000 a month, right? Million dollars a year of income, $50,000 a month of what he's gonna spend in expenses.

But he just says, "You know what? "I don't love Toronto. "I'm gonna move someplace that has good weather "and I'm just gonna be tax efficient." And so maybe he's gonna go and set up residence in, again, set us up residence in Dubai, lives in Dubai for four or five months a year.

When it gets hot in Dubai, he goes to Europe, spend some time in Europe. He can go to France, he can go to Mediterranean, he can go to Monaco, doesn't matter. And then he goes to Miami, right? Or San Diego, and he goes and spends three months every year during the winter in San Diego, right?

So he's not becoming a US person for tax purposes. He's not generating income there, he's just spending three months a year there. Well, he's got great weather, but he's saving $400,000 a year. Well, let's do the math. 27-year-old saves $400,000 per year. Does it for 40 years from age 27 to 67, invests at a boring 8% return, and starts with nothing, pretentious starts with nothing 'cause he's spending just income, and he's just doing the tax savings.

Well, that's $111 million 40 years from now. Would I give up having $111 million for my children? Would I give up having $111 million for my church, for my charity, for my grandma? Would I give up 100, she's probably not gonna be alive when I'm 67. Would I give up $111 million to set up an offshore trust that's going to endow my children for potentially 10 generations in order to feel good about sending that $400,000 to the Canadian or the US American government?

Seems pretty dumb, doesn't it? And the answer is, in my opinion, it's obvious, because it's often people not thinking creatively about their options and not realizing that you can have win-win decisions. If you wanna spend time in San Diego, fine, just make it three months a year. Don't make it 12 months a year.

If it's hot in Dubai, go to San Diego. If you don't like Dubai, then pick some other place. You can set it up as the point in a creative way that gives you the best of both. You can have better weather, better safety, better lifestyle, better culture, and low or no taxes.

So if you're not happy with your options, go back and try to figure out, is there a better option? And if you've made the best choice, that you think this is the best option, Josh, I don't want, listen, I'm a US citizen. I don't wanna go anywhere. I just wanna do there, and so I like San Diego.

Great, go for it. But consider the cost carefully and make sure you've actually recognized what's available to you. And then finally, make the decision that seems best to you based upon the personal factors, not just the tax factors. You may not be me, right? If I were this guy, 27 years old, $14 million net worth, I would do what I've described.

I wouldn't live in Canada. I wouldn't live in the United States. I'd visit them. Canada and the United States treats visitors very well. They treat tax residents very poorly. So if your business, if your net worth is something that can be run better in another jurisdiction, do it. I would choose that.

If you don't wanna live that lifestyle though, then you just make the examined choice that's right for you. So my answer is that taxes should be calculated and you should make an examined choice, an examined decision that's right for you. And there are very, very good and compelling reasons why many people will consciously choose to live in a higher tax jurisdiction because it gives them other benefits, both financial and non-financial.

I would rather live in New York City than on Pitcairn Island. I would rather live in Paris, France, or Toronto, Canada, than on Pitcairn Island. I will make far more money net of taxes by living in any of those three cities than by living on Pitcairn Island. So I'm gonna come out ahead just because of my net wealth is gonna be bigger and I'm gonna enjoy every day a whole lot more than living on Pitcairn Island.

But you should look and say, can I get something and still get it tax efficiently? Can I get something better and have the benefits of tax efficiency? For US Americans, if you will just simply spend no more than 35 days per year inside the United States, meaning that you spend 330 days per year or more outside of the United States, then you can exempt the first hundred and about $507,000 of your income from federal income taxes.

And so let's say that you're someone like me, right? You like traveling. You wanna take your kids and show them the world. And you would do that whether you lived in the United States or you didn't live in the United States. You just wanna show your kids the world.

That's what we're planning on doing is doing some traveling this year. Well, a side benefit of that is some tax savings. It's not the number one reason. I wouldn't leave the United States and move to Pitcairn Island so that I can save on taxes. But if you're telling me I could leave the United States, go spend a month in France, month in Portugal, month in Turkey, spend a month in Dubai, spend a month in Hong Kong, spend a month in Thailand, spend a month in Australia.

Well, all of a sudden now, I've gotten more personal benefits, this interesting travel lifestyle. I may have lowered my personal expenses depending on my style of travel. I've certainly lived a more interesting life and I've had the benefits of tax savings. And so I think in many cases, there's a way to find the win-win if you're creative.

If you take the time, do the research, get to know yourself and work your way through it. At the end of the day, I think people are simply unimaginative. And often you've gotten so used to being abused by your embezzling business partner who beats you up if you don't pay him his fair share that you just don't think there's another choice.

This is what I find incomprehensible. I don't understand why don't you wake up and realize, many people, why don't you wake up and realize that you're in business with an abusive business partner who's stealing half your money and giving you almost nothing back for it? You say, well, my business partner gives me a $1,300 check.

Yeah, your business partner shut down your business for six months. I often imagine, okay, what if I were a New Yorker? I've paid all this money to live in this place where they closed my business down and refused to let me operate for months, six months. That's insane. That's insane.

I don't understand why people sit back and let themselves be abused day after day after day. I'm trying to carefully avoid making this ranty, but I guess for 60 seconds of ranting, unless you're Lockheed Martin, why do you deal with people who abuse you? Some point in time, walk away, walk away.

Now, I understand why Ramit advocates for higher taxes. It's smart, it's smart. If you're a wealthy person and you live in a society like the United States that is built on covetousness, where it's one of the most important, I mean, I see it as vice, as sin, but today it's considered to be a popular thing, you'd be foolish not to advocate for higher taxes.

I think if you're rich, one of the smartest things that you can do is advocate for higher taxes. I encourage you to do it. Don't tell anyone to listen to Radical Personal Finance. You should advocate, or at least not advocate for lower taxes. The rich have always had to worry about people coming in with pitchforks and torches to take what they have.

Remember that throughout the world, for basically all of history that we can figure out, you've always had 20% of the people have always controlled 80% of the resources. And then in the modern world where we have better numbers, we know, of course, that the top 20% of the top 20% control 80% of the resources, and then the top 20% of the top 20% control 80% of those, and it goes on, and that's why you have 1% of the world's population that controls 50% of the world's wealth.

Whenever you read a story on, well, so-and-so, the top .00 whatever 1% owns X number of billions of dollars or trillions of dollars, just sit down and do a Pareto principle and ask yourself, is this a normal distribution? 'Cause a normal distribution is that 20% of the society owns 80% of the resources, which means that 4% of the society owns 64% of the resources, which means that 20% of the 4%, which is like 1% owns, what would that be, 51% of the resources, et cetera.

And so there's always been a problem. And so you should intelligently advocate for higher taxes. Think about a guy like Warren Buffett. Imagine how hated Warren Buffett would be if he publicly advocated for lower taxes. But because he says, well, we should have the billionaire's pledge and we should have higher taxes, and after all, my secretary pays more money in tax than I do, then that causes him to be the beloved, elder, wise grandfather that we all love, rather than the hated, greedy capitalist.

Meanwhile, what's the actual reality? Well, number one, wealthy people always have the money to pay for good tax planning. They can easily afford it and it's well within their interests, which is why being a tax planner for the wealthy is a very good business, that's number one. Number two, wealthy people always have the choice to influence government for themselves.

Why does Amazon say, yeah, absolutely, we support collecting state-level income taxes on all internet commerce? Because they're so big now that they don't need that benefit. They would have died if they had to collect and calculate sales taxes for every state in the country when they started, but now they're so big, they can do that and they can freeze out their competitors.

So as companies grow, they advocate for more intervention, more regulation, because they have the money to pay for the regulation, whereas their upstart competitors don't. Number three, wealthy people can adjust their operations so that they don't generally owe tax. Number four, if the tax regime gets too heavy, they can leave, rich people can leave.

It's always the case. You saw New Jersey, whatever it was years ago, the story, oh, we lost thousands of millionaires and even the governors of the state. Listen, we can't do any more of this, guys, we're losing all our wealthy people. France years ago, wealth taxes, people left. The United States doesn't offer a bad proposition.

It's not as tax efficient as most places, but as long as you're careful, you got decent capital gains tax rates, et cetera, you can live pretty well there. You get some good lifestyle benefits, it's hard to move, and so you're not gonna see a lot of wealthy people change.

And then finally, you should know, if you're wealthy, you absolutely know, you got the Laffer curve in full effect. The US government has dialed in perfectly on the optimal level of taxation. That's why I don't personally expect taxes to change all that much. You don't get any changes. You get a lot of publicized, oh, President Trump, we're gonna lower your taxes, President Biden, we're gonna raise your taxes.

I would be, I won't, I should be careful about putting my money where my mouth is. I'm happy to do it, but I just try not to make reckless statements. I cannot imagine, let's say that you get President Biden gets through a tax proposal, top marginal bracket, what, might go to 39, 41, 42%.

It's not gonna be over 45, no chance, right? Why? Because while the politicians need to claim a victory, the realists always know we've dialed it in. We've got the highest possible level of taxation that we can get people to pay without charging so much that they're willing to leave.

We abuse them just enough to get enough money to support our lifestyle, but not so much that they actually decide that they gotta leave and get out of the abusive relationship. And so meanwhile, it's very good policy for wealthy people to advocate for higher taxes. And I'm not being, I'm not accusing anyone of being insincere.

I think that I'm sure that Ramit's perfectly sincere about this. I'm just pointing out for you that it's very good policy for you to advocate for higher taxes because if you're wealthy, there's very little chance of it affecting you. You can plan around it. You can afford to pay guys to do it.

You can always leave, but in the meantime, you'll get the social credibility and be in a safer position as a wealthy person by saying, listen, I'm not your enemy, right? I advocate for higher taxes, right? I'm not your enemy. I got a billion dollars. I could go ahead and, you know, Warren Buffett could go ahead and stroke a check and pay off some national debt.

He could do that, but he says, no, I'm gonna give it away, right? I'm altruistic. We're gonna give it away. We're gonna give it to the Bill and Melinda Gates Foundation, et cetera, and he gets the social credibility while he's alive. So that's kind of a minor tangent, but you should recognize always that it's good public policy for wealthy people to advocate for higher taxation 'cause you're well-protected if there actually is higher taxation.

You can always leave, go elsewhere, get out of the tax net, but in the meantime, you'll get much more social credibility, much more popularity, which you can enjoy now in this space. So forgive me for this minor tangent. I just think it's important that you recognize how these social dynamics work.

That's it for today's show. In summary, I would simply say you should consider taxes. Follow this process that I've outlined for you. Calculate the actual tax liabilities of a certain decision. If you're thinking about moving from Florida to North Carolina or from the Bahamas to France, then calculate the actual tax liabilities.

Calculate the other costs and benefits of your decision, both the financial costs. You're gonna build a bigger career. You're gonna make more money net of higher taxes, and also the non-financial costs. I'm just gonna live a better lifestyle, right? I'd rather live in New York than in Pitcairn Island.

Consider and calculate the opportunity costs of your decision. What are you giving up, right? You don't have to live in Pitcairn Island. You could live in Panama City, get a tax-efficient lifestyle. You could live in Uruguay, get a tax-efficient lifestyle. You could live in Monaco, get a tax-efficient lifestyle.

So you don't have to move to New York City, and it might be worth it to you to get some of those things. Think creatively about your options and look for those win-win situations. Hey, I wanna travel the world. I'd like to live on a beach. I'd like to do that, so why not go ahead and live in Thailand and save money on tax?

Come and make whatever decision seems best to you based upon the overall factors and emphasize those personal factors, not just the tax factors. Having been a tax planner for many years, having spent a lot of money on taxes, having saved a lot of money on taxes, I will tell you this.

I am not willing to let the tax tail wag me the dog. I'm not willing to give up something that's important to me and say, oh, look, but we saved money in tax. I'm not willing to look at my children and say, yeah, I did something that I didn't think was best for you, but look, we saved money in tax.

It seems really hollow. I'm gonna look for the best solutions that I can find. Tax savings are not the ultimate goal, but they are a factor. So this is what I wrestle with personally, me personally. I think, okay, well, I could move to the United States and I could pay more tax, or I could spend the tens of thousands of dollars a year and take my children around the world.

Which of those is a better investment? I'm not convinced that it's a better investment for them to be in the United States than to spend tens of thousands of dollars a year taking them around the world. I just assume, I think, I just assume use those tax savings and save the money or use the tax savings and buy airplane tickets.

I think, well, should I go and spend more tax or should I be able to afford an annual ski vacation that I would otherwise wouldn't spend the money on? Or should I go ahead and spend more money on a private school tuition that I might not otherwise spend the money on?

Should I hire a private tutor? Is it better for me to move to Atlanta, Georgia and live in Atlanta, Georgia, or should I take the same $50,000 a year of tax and live in a tax efficient place and spend that on a private tutor? Right, these are the trade-offs, these are the opportunity costs.

So I am not willing to prioritize taxes at the height of the list. I'm not willing to move to Pitcairn Island. But if I can find that win-win, if I can find that balance, to me, that's a compelling thing. That balance might be Miami, Florida. Right, that balance might be the Bahamas.

But can I find that balance that puts me in the overall best situation? I encourage you to think about it and think creatively. Don't let taxes drive your life, but don't ignore them either because they are a real net cost that takes money out of your pocket and sends it to someone else.

Thank you so much for listening, I really appreciate it. Be back with you very soon. I would just ask today, if you have not left me a rating and a review, I would be so grateful if you would do that. Just take a quick moment right now, click pause, grab whatever app you're listening to me on, and just simply leave a quick star rating and a review.

One or two sentences is perfect, but that would really help my show to grow and I'd be so grateful. Thank you so much.