I shop with credit cards that give me 2-5% back on purchases. I pay off my balance every month and have never paid one penny in interest or penalties in over a decade. My credit cards therefore pay ~$1,500/year tax free.
I don’t really have anything to add as this is pretty much all spot on to how the wealthy live, but on this one I’d like to point out that you’re not actually making money - you’re just taking back part of the money that you already paid. That money isn’t paid by the credit card companies, they’d never be dumb enough to leave money on the table like that. They pay it through increased transaction fees for the businesses, who eat the extra cost through higher prices. There are states that do something similar with their recycling programs. They give you 5 cents per bottle you recycle at the center, but you paid a 5 cent bottle deposit when you bought them at the store. You’re not making any money, or even making back some of what you paid the store. You’re just getting your deposit back.
Maybe you somehow reduce your taxes by cycling that money through a cash back program? I’m not well versed on finances, so I won’t even try to theorize on that, but it certainly isn’t free money or something.
Yes, the credit card spending is technically a rebate, hence why it is tax free. However, I am going to purchase an identical basket of goods and services whether or not I use credit, so it is functionally identical.
I don’t really have anything to add as this is pretty much all spot on to how the wealthy live, but on this one I’d like to point out that you’re not actually making money - you’re just taking back part of the money that you already paid. That money isn’t paid by the credit card companies, they’d never be dumb enough to leave money on the table like that. They pay it through increased transaction fees for the businesses, who eat the extra cost through higher prices. There are states that do something similar with their recycling programs. They give you 5 cents per bottle you recycle at the center, but you paid a 5 cent bottle deposit when you bought them at the store. You’re not making any money, or even making back some of what you paid the store. You’re just getting your deposit back.
Maybe you somehow reduce your taxes by cycling that money through a cash back program? I’m not well versed on finances, so I won’t even try to theorize on that, but it certainly isn’t free money or something.
Yes, the credit card spending is technically a rebate, hence why it is tax free. However, I am going to purchase an identical basket of goods and services whether or not I use credit, so it is functionally identical.