7 Minute Read: Tax Free Wealth Book Summary

7 Minute Read: Tax Free Wealth Book Summary

I’ll admit. I’ve spent most of my life relying on other people for help in areas that I don’t know much about.

One of them is construction. My dad owns a hardware store, so you’d think I’d be handy with tools. Think again!

Unfortunately, he didn’t pass down any handyman genes to yours truly.

That’s OK. It gives him an excuse to come over whenever something breaks (which we like!).

We’re in the process (finished now!) of undergoing a major home remodel. Again, I relied on people who were more knowledgeable in their areas of expertise to complete the renovations.

To say that the entire process has been a disaster would be an understatement.


I guess I place too much trust in mankind. It’s a shame that there are so many unethical people in this world but hey, I’m not here to judge.

Let’s just say that I’ve learned some MAJOR lessons when it comes to home remodeling so if and when it happens again, I’ll know what to ask and look for in a contractor and subs.

You might be asking yourself, “What does a home remodel have to do with tax free wealth?”

Similar to our home project, if you want to take control of your financial future, you must obtain a basic foundation and know how tax laws work.

If you give up TOTAL control of your entire career to your financial advisor and tax preparer without having a basic understanding of what they’re doing regarding your situation, then their decisions can have a HUGE impact on your finances.

 “Taxes are your largest single expense.” – Robert Kiyosaki

As a high-income earner, one of your biggest expenses will be taxes.

How much do you really know about the US tax code?

Do you have a support team to assist you with one of your largest expenses?

Proverbs 15:22 –Plans fail for lack of counsel, but with many advisers they succeed.”

If not, then author and CPA Tom Wheelwright (part of Robert Kiyosaki’s Rich Dad advisors) could be just the person that could help you.


Let’s dive into to his fantastic, must-read book, Tax Free Wealth.

Join the Passive Investors Circle

Forward by Robert Kiyosaki


Tax Free Wealth’s Forward was written by Rich Dad Poor Dad (one of the best personal finance books of all time) author Robert Kiyosaki.

He claims there are ONLY two things certain in life: death and taxes and we should do everything in our power to put off both.

As healthcare providers, we understand the basic principles to live longer, we must maintain a healthy lifestyle by eating right with regular exercise.

But the difficulty comes when we try to figure out ways to pay less taxes or even bring it to $0.

Kiyosaki loves real estate investments and has built his company, teaching others how to lower taxes permanently.

Here’s a video of his explanation of how President Trump Pays ZERO in taxes:

The Cashflow Quadrant


One of the MOST eye-opening books I’ve ever come across is Kiyosaki’s Cashflow Quadrant.

Before I read it, I thought I had it going on being in the “Self-employed” category as I own my perodontal practice.

Usually, becoming a small business owner is the American Dream, right?

I don’t have to answer to anyone. I’m the boss until my wife walks in :).

So you have to realize my disappointment when I found out that being “self employed” put me on the left side “poor side” of his quadrant.

Image Courtesy of Wealthfit.com

The four quadrants explain the various career paths along with the current tax system. It shows how the U.S. tax law has been setup and how various professionals (myself included) view the world.

If you want to lower your taxable income severely, then understanding the four types of people that make up the “Cashflow Quadrant” is a must:

  • E = Employee
  • S = Self-employed
  • B = Business owner
  • I = Investor

Don’t Miss Any Updates. Each week I’ll send you advice on how to reach financial independence with passive income from real estate.

Sign up for my newsletter

Active Income

Even though doctors are considered high-income earners, most fall on the left side of the quadrant as they’re either employees or self-employed.

This means they wake up daily and trade their time for money.

For them… No patients = No Income $$

Also, those on the “poor” side pay the highest percentage of taxes even though they make much less money than business owners or investors.

That’s because they don’t understand the tax strategies the rich focus on.

Passive Income

The right or “rich” side of the quadrant is where we should focus our attention of landing on.

This is where passive income comes into play where we don’t have to be physically present to earn a paycheck.

How nice would that be?

Unfortunately, most doctors and other high-income professionals NEVER shift to this side which can lead to burn out.

With passive income, you can leverage people and money to build massive amounts of wealth, even while you’re busy doing other things.

You’re literally making money while you sleep.

Now let me ask you, what side of the quadrant would you rather end up on?


Two Important Rules From Tax Free Wealth

One of the judges who served on the United States Court of Appeals for the Second Circuit, Judge Learned Hand (yes, that was his real name), once said:

“Any one may so arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury. There is not even a patriotic duty to increase one’s taxes.” – Judge Learned Hand

This goes against what we consider is success, especially when talking amongst colleagues at cocktail parties.

Usually, the conversation goes something like this:

Dr. T:Man, we had a fantastic year. I paid over $290,000 in taxes. I guess you got to make money to pay BIG taxes right?”

Dr. C:Yeah, that’s what I’ve always heard too. If you’re NOT paying taxes then obviously you’re a poor person.”

You’ve got to hand it to them. The government does a GREAT job training us to believe that we somehow owe them money no matter what.

There are basically two main rules regarding the US tax law:

Rule #1 – Focus on passive income

I understand that a portion of our taxes should go to Uncle Sam to help pay for infrastructure (roads, bridges, etc.), schools, and the military.

But ultimately, it’s your money and not theirs.

Rich people have a very low tax burden because they don’t earn their money as most people do. They know that the best way to legally avoid taxes is by generating passive income out of the right side of the Cashflow quadrant previously discussed.

Remember, passive income is taxed less, and it’s also a result of cash-flowing assets, not selling your time as an employee.

Rule #2 The tax law is written to lower your taxes

In the book, Tom states that the IRS has written the US tax code in a way to SAVE us money. That’s right. He states that the current tax code contains over 5,800 pages, and only 30 of those address how to pay taxes.

This means that the IRS dedicated 5,770 or 99.5% of the code to help us AVOID taxes, thus increasing our wealth.

The government encourages Americans to start businesses and invest in real estate, thus to provide affordable housing.

By not taking advantage of tax deductions, you’re literally robbing yourself and your financial future.

Taxes are based on your facts and circumstances—changing your facts will change your taxes.” – Tom Wheelwright

Join the Passive Investors Circle

Entrepreneurs and Investors Get the Breaks


It’s safe to say that those who are uneducated about our tax code find it hard to believe that well-known real estate investors such as Donald Trump and Warren Buffet pay little to no taxes.

The general public typically complains that businesspeople get an unfair advantage, but if they knew the rules, then they’d play by them too.

Literally, anyone can start a business and receive the tax benefits provided by our country’s tax code.

In Tax Free Wealth, Tom Wheelwright explains that some of the most generous tax incentives are given to rental property owners.

It’s a true way to generate income and build vast wealth while at the same time permanently lower taxes.

Why does the right side of the quadrant (business owners, entrepreneurs, and investors) pay much less tax than employees and the self-employed?

The author states that it’s what Congress intended in the first place.


Bottom line

The bottom line is that the government and current tax laws want:

  • business owners and entrepreneurs to create jobs
  • real estate investors to create housing

Think about it. Most of the tax breaks that real estate investors get act as subsidies to encourage more housing. This helps local economies by making it easier to attract employers and provide good paying jobs which helps stimulate economic growth.

Doctors Need Tax Help

Whenever we hear that the IRS is making tax law changes, typically doctors aren’t on the receiving in.

When tax breaks are put in for business entities and investors (right side of quadrant), doctors rarely take advantage of those breaks.

Focus on getting on the “right”

Most of us dread any changes as it usually equates to a larger tax bill.

But it doesn’t have to be that way.

Tom Wheelwright has dedicated his career to finding ways to teach us how to pay the LEAST amount of taxes legally.

This book should open your eyes so you can better understand the benefits of having a good knowledge of tax law and how those returns are the single biggest thing that accelerates your journey toward financial freedom.

Don’t Miss Any Updates. Each week I’ll send you advice on how to reach financial independence with passive income from real estate.

Sign up for my newsletter


Tax-Free Wealth by Tom Wheelwright covers key concepts about taxes, tax law, and real estate investing, including:

  • How tax law is written to encourage certain types of economic behavior and not to create tax revenue
  • Why tax planning should be a daily activity instead of an end-of-the-year rush to find receipts and generate reports
  • Four types of income earners and why the government wants wealthier people to pay less tax
  • Five types of income buckets and which one leaves investors with more money in their pockets
  • Why businesspeople, entrepreneurs, and investors get all the tax breaks
  • What real estate investors can do to never pay tax on their cash flow or capital gains

Want to watch a 5 minute book summary?

Check out this YouTube video: