Rich Dad Poor Dad

In Chapter 4, Kiyosaki makes an argument for understanding the critical importance of comprehending legal and tax advantages as integral components of building enduring wealth. Kiyosaki opens the chapter with a description of the Robin Hood fable and explains why his rich dad challenges it. Kiyosaki states that the rich, unlike the middle class, are not really taxed, and that the middle class, which is taxed, in turn pays for the poor.

Kiyosaki highlights the contrasting tax treatment of business owners with corporate structures, such as C corps, S corps, or LLCs, versus employees who work for corporations. Business owners can leverage the tax code to their benefit by earning, spending, and then paying taxes on their income, while in contrast employees are taxed first on their income, leaving them with less to cover their expenses.

Moreover, Kiyosaki emphasizes the protective shield provided by corporate structures against lawsuits. Wealthy individuals often shield their assets by controlling them through corporations, making it difficult for potential litigants to access their personal wealth, a tactic which ensures that even if someone sues a wealthy individual, they might discover that the person owns nothing in their name while retaining control over everything.