Ordinary Income

OK, I admit that a title like “Ordinary Income” is not exactly an attention-getter. I didn’t make up the term, so don’t blame me for being boring. However, I can guarantee that the extremely high taxes that you will pay on your “ordinary” income will get your attention and cause more than a little bit of excitement in your soul.

No income is taxed at a higher rate than ordinary income—especially the subcategory of ordinary income known as “earned” income. Worse yet, no other type of income is more common. Ordinary income is what all of us ordinary folks earn—but it’s not the kind of income that the elite use to fund their fortunes and their lifestyles.

Ordinary income is extraordinarily taxed, and it is only through unordinary means that you can avoid an excessive tax liability. That awareness and avoidance is what Part II is all about.