Rich Dad Scam #2: “You Need a Job”

Let’s get right back into it.

I opened up yesterday’s issue talking about all the scams we see everyday, whether we know it or not.

Some scams really are difficult to spot—even impossible for some people to ever recognize.

From my rich dad, I learned financial smarts, which taught me how to spot scams—and how to not be taken in. Without those financial smarts, it can be very easy to be taken in by scams, especially the scams that the rich use to keep the poor in their place.

To break away from them you usually need someone else to warn you that you’re being duped, to tell you that you’re being taken advantage of, and to tell you what you can do about it.

Yesterday, I told you the higher education system has been scamming you all your life.

Today, you’re going to find out why “Get a Job” is just as big a scam as any.

The Big One: You Need a Job

When I was young, my poor dad always told me that I needed to go to school so that I could get a good job. To my poor dad, getting a good job was the most important thing in life.

My poor dad worked very hard. And he was always worried about money. Yet, he never got ahead. His job was one of the things that actually kept him from succeeding. He toiled away working for others, often getting raises only to keep up with the cost of living and paying a high percentage to the government in taxes.

My rich dad, on the other hand, never had a “real” job, and he was rich and successful.

My rich dad understood that the sentiment, “Get a job,” was a scam.

Rather than get a job, he made jobs. Rather than work for someone else, he worked for himself. Rather than pay high taxes, he used the tax code to get rich.

How the Scam Works

This such a massive scam because the trap it lays out makes you poorer, especially if you have a high paying job, because you pay the most in taxes.

And guess who isn’t paying a lot of taxes? The owner of the business you work for. The scam gets even worse when you look at it long-term. If you do well at your job, if you claw your way up the ladder, what is your reward? A small increase in pay and a bigger increase in taxes.

It gets even worse if you work for yourself. You pay the highest taxes in the form of self-employment taxes.

The only way to avoid this is to be the owner of a big business or to be an investor, to put your money to work for you.

That’s where the rich work and live.

The system is set up to benefit the rich so they can keep their money while making sure YOU keep getting taxed.

The Tax Scam

When you realize that taxes are a way of keeping you in your place, you can see that this Rich Dad Scam is really just an extension of Rich Dad Scam #1, “Go to School.” It’s in school that you learn to be a good employee, that if you work hard you can succeed. But really, you can’t, not on those terms.

The government gives tax breaks to people they identify as job creators: entrepreneurs and big business owners.

They want the private sector to develop real estate, start companies, and generate wealth. The government rewards citizens like that. In return, the government expects employees to pay taxes that cover things like Medicare and Social Security. The government loves low unemployment rates for a whole host of reasons, and “getting the country to work” helps them out a whole lot more than it helps the worker.

Some people argue that employers pay these taxes too, but really what they are doing is using money that would otherwise pay you to pay their share of the taxes.

False Security

The idea that a job is an important part of your personal security is a big part of the scam, too.

The reality is that having a job does not make you secure. Rewind the clock and look at life a decade ago: unemployment hovering around 10%, people getting laid off all over the country, living out what we now call the Great Recession. In an economy where people are losing their jobs, the more secure position is to own, or at least have a stake in, the company that is firing people. And if history tells us anything, we’re always just X number of days away from the next crisis. Everyone can be fired. Except for the people who own the company doing the firing.

Stepping Away

My poor dad, just like most people, was conditioned and taught from the day he was born to be an employee.

My rich dad broke away from that thinking and was an entrepreneur. He put his money to work. He was on the side of the rich, the side protected by the government.

But how do you get there?

The first answer is simple. You do it by increasing your financial education and beginning to think like an entrepreneur instead of an employee.

When you do that, you break out of the rat race. You realize that everything you’ve been taught about getting a job and finding success is a lie, that there is another way, and it’s a way that actually works while also giving you a better life.

And that’s the secret the rich don’t want you to know.

The Daily Reckoning