What Wealthy Americans (and the World) Get Wrong About Taxes

As I flew back to Poland after visiting family in Canada, I had an interesting encounter on my

flight. I was seated next to an American who lives in Dubai—a PhD in economics, no less.

Once we began discussing my work, he posed a question, “Could he avoid paying U.S.

taxes by setting up a ‘secret trust’ offshore?” My answer was simple… No. He seemed

surprised and asked how the wealthy manage to pay no taxes at all. When I asked him what

percentage of total annual U.S. personal tax revenue he thought the top 1% contributed, his

response was astonishing: “less than 1%.”

When I told him the actual number was over 40%, he was incredulous. Fortunately, the

plane had WiFi, so I directed him to the government’s official statistics. Seeing the data left

him dumbfounded. This conversation revealed how widespread the myth of “The rich don’t

pay taxes” has become—even among highly educated individuals. If this misconception is

pervasive among experts, imagine how firmly entrenched it is in the minds of the average

voter.

This isn’t the first time I’ve seen such myths in action. I vividly recall conversations with

Americans during the 1990s and early 2000s. Many were looking for ways to escape what

they felt was an unfair tax burden. Some disregarded my advice to pursue legal strategies

for expatriation, opting instead for “secrecy planning.” One told me they’d met a Swiss

banker at Art Basel Miami who promised to open a “SECRET Swiss bank account” that the

IRS would never discover. For a while, this evasion strategy seemed to work—until it didn’t.

When whistleblower Bradley C. Birkenfeld came forward, those once-hidden accounts

became liabilities, leading to severe penalties.

The lesson is clear: Secrecy Planning is Stupid Planning. No matter how tempting the

shortcut, it inevitably ends in tears. For those who feel burdened by taxes, there are two

legitimate paths forward:

“Play the game better” through domestic tax planning, or

“Leave the game” by legally exiting the U.S. tax system through expatriation.

While proper planning is essential, it’s also vital to accept that myths about the wealthy not

paying their fair share are not going away anytime soon. As Steve Bannon recently

remarked, “If the ox has got to get gored, it’s got to come out of the wealthy. It’s got to come

out of the billionaire class.” Whether driven by jealousy or attempts at debt reduction, the

“Tax the Rich” wildfire continues to spread.

For HNW individuals, hoping that reality will extinguish this fire is not a strategy. Instead,

education and preparation are your best defenses. Legal planning—not secrecy—is the way

to protect your wealth and secure your future.

Stay ahead of the curve—don’t wait until the fire has spread. Protect your wealth with

proper planning. If you’re interested in learning more, sign up for our upcoming webinar by

entering your email here.