FOUR SYSTEMS OF INCOME


Open the PDF & Print: Financial Mindset Worksheet I. Complete The Worksheet.


Poor, Middle, Upper Middle & Rich

Notice the focus on the different mindsets, terminology, cash flow and taxes. Notice that the taxes benefit the rich and that the taxes confiscate wealth from the middle classes

I. Poor

A. Earned Income – Family of 4 making $23,000 – 40,000/yr.

1. How can you tell where they are in the structure? Their terminology tells you where they are, because they say what they are taught to believe about cash. You will hear things like:

  • “I need the government assistance with housing.”
  • “I need food stamps (EBT Card).”
  • “I need government health care.”

2. Tax Implication – They are not going to pay due to lack of earned income, but they may receive money back each year.

3. What do they spend their money on – (expense driven) entertainment, food, clothing.

II. Middle Class

A. Earned Income – Average $50,000/yr. (60% of the Country earn up to this amount)

1. How can you tell where they are in the structure? Their terminology tells you where they are, because they say what they are taught to believe about cash. You will hear things like:

  • “I own my own house.”
  • “I own my own car.”
  • “I want to climb the ladder.”
  • “I am looking for a better job with benefits.”
  • “I am vested in 401k.”
  • “I want to retire at 65.”

2. Tax Implication – They pay earned income tax of 39%. They spend 2 days out of 5 work days of pay tax.

3. What they spend their money on- (liabilities driven) credit cards, vehicle, home, boats & campers. (interest payment) NONE OF THESE ARE ASSETS!

III. Upper Middle Class

A. Corporate, Dividend and or Earned Income (Depends on asset protection structure: How they set up the corporation or a CEO)– Usually max out at $500,000/year

1. How can you tell where they are in the structure? Their terminology tells you where they are, because they say what they are taught to believe about cash. You will hear things like:

  • “I own my own company.”
  • “I own my own houses.”
  • “I own my own cars.”
  • These businesses are businesses that involve their time and attention most of the time like (lawyers, skilled electrician and plumbers).

2. Tax Implications – Next tax bracket for earned income, double taxation for corporate with personal or dividends rate of 20%.

3. What they spend their money on- (liabilities driven) houses, yacht and cars at the next level. They also fund 401k.

IV. Rich

A. Passive Income – They receive a small paycheck. These people work to acquire and accumulate assets that create cash flow. These people work to learn new ways to find another stream of cash.

1. How can you tell where they are in the structure? Their terminology tells you where they are, because they say what they are taught to believe about cash. You will hear things like:

  • “I control this corporation.”
  • “I control 500 apartment units.”
  • Trust owns this house.”
  • “Company leased car.”
  • These businesses are in asset protections that are owned by trusts or other structures that they set up that they control.

2. Tax Implication– Instead of paying company taxes on profit. They take company revenue to invest in company owned assets that produces cash flow. These assets are subsidized, depreciate and write off expenses.

3. They buy companies, real estate and farms: Invest in cash flowing assets.

*Four investment vehicles that provide subsidies: providing housing, jobs, energy or food receive subsidies and tax write-offs.