Does minimising your taxes impair your ability to borrow?

Investopoly · Sep 26, 2018 · 9m

Paying minimal tax probably appeals to most people. And as tax is often our biggest lifetime cash outflow, it might seem logical that minimising it is a great way to build wealth. However, I’m going to suggest that perhaps you need to pay more tax to build wealth. A higher tax bill typically means you have a higher income and therefore a higher borrowing capacity.I have seen lots of people cut their nose off to spite their face by focusing on the wrong things at the wrong times. Sometimes tax minimisation is more important than borrowing capacity maximisation. However, the reverse can also be…