What does this diagram from Robert Kiyosaki about corporations mean?
It looks like RK is encouraging tax fraud. Suggesting that one have their business cover personal expenses sounds like the advice that got Leona Helmsley in hot water. "These types of diagrams appear all throughout Kiyosaki's Rich Dad, Poor Dad book.  The arrows in the diagrams represent cash flow. For example, the first two diagrams of this type in the book are:  The idea being presented here is that an asset generates income, and a liability generates expenses.  According to the book, rich people spend their money buying assets, while middle class people buy liabilities. The diagram you posted above does not appear in the edition of the book I have (Warner Books Edition, printed in 2000).  However, the following similar diagram appears in the chapter titled ""The History of Taxes and the Power of Corporations"":  The idea behind this diagram is to demonstrate what the author considers the tax advantages of a personal corporation: using a corporation to pay for certain expenses with pre-tax dollars.  Here is a quote from this chapter: Employees earn and get taxed and they try to live on what is left.  A corporation earns, spends everything it can, and is taxed on anything that is left.  It's one of the biggest legal tax loopholes that the rich use.  They're easy to set up and are not expensive if you own investments that are producing good cash flow.  For example; by owning your own corporation - vacations are board meetings in Hawaii.  Car payments, insurance, repairs are company expenses.  Health club membership is a company expense.  Most restaurant meals are partial expenses.  And on and on - but do it legally with pre-tax dollars. This piece of advice, like so much of the book, may contain a small amount of truth, but is oversimplified and potentially dangerous if taken a face value.  There are many examples, as JoeTaxpayer mentioned, of people who tried to deduct too many expenses and failed to make a business case for them that would satisfy the IRS."
This article leaves quite a bit of information out, I gather. Poorly written. How many corporations is he getting paid from? What were the terms of the agreement? It sounds like Kiyosaki himself isn't going bankrupt, it sounds like some small, off-shoot is taking the brunt of the damages so the rest of his assets can move on. This guy knows how to protect himself and his companies. This could be nothing more than a parking ticket for him, and this news website decided to sensationalize it. What a surprise. "That has not been disproved. What the quote means is ""when [workers as a collective] earn more, [businesses as a collective] get more customers"". It's impossible to disprove this, because it's like a kind of economic tautology. It's like, if I give you five one dollar bills, how many five dollars will you have.   What you mean to argue is that that's spacious, because the real world is more complicated." "Actually, this quote is bogus. It is from a book (Web of Debt by Ellen Brown). Even Brown herself now acknowledges this fact: Chapter 7, #20 at http://webofdebt.wordpress.com/questions-and-answers/response-to-gary-north/response-to-gary-north-2/  From Brown: ""A bogus quote from Garfield on the control over money. I was already alerted to that. Garfield is no longer mentioned in my book.""" In the US, and I suspect in most of the developed world, one major point of a corporation is limited liability.  The stockholders are not on the hook for liabilities beyond their investment.  If the company does something terrible, or fails economically, it goes bankrupt.  Usually the stockholders have their investment wiped out, but they are guaranteed that they do not have to pay more in to any settlement. Just clarifying in case some people just skim and walk away thinking the author is bankrupt. Kiyosaki is involved in many business ventures. One of his companies filed for bankruptcy, which is a separate entity to himself. He himself did not lose any personal assets and is still very rich. Thanks for reading. This is supply side nonsense. The primary driver of growth is demand. If demand is growing, then lower taxes will allow the company to meet growing demand faster. However, if demand is stable and currently being met by the company, reducing taxes will only enrich shareholders at the expense of society at large. Unless there is growing demand, a corporation will always choose to allocate profit via tax cuts to shareholders rather than to employees in the form of jobs or raises. "I appreciate the time and thought you put into your comment. I, however, disagree with much of what you said. I don't think you understand the ""anti-business"" mentality at all. In fact calling it antibusiness to me sounds just horribly slanted. The wrongs that are commited by the business community should not be dismissed because they are ""hard to track"". Even if the statement is true, it doesn't matter. There is no excuse and frankly statements like that sound extremely apologetic.   With that said, I agree with you 100% that a lot of the discourse on this subreddit is not conducive to discussion/learning. I certainly don't want to discourage you from posting. The frustration the ""business community"" feels by being misunderstood is certainly shared by the other side. If you would like to hear my thoughts on anything specific feel free to ask." This actually makes sense, although it's about twice as complicated as any concept I've seen laid out in a business, rather than economics context, so it's no surprise that people (as you say) get it wrong.   Also, it emphasizes that corporate taxation is not exactly an easy thing to deal with. Read your link. Thanks.  The basic idea is that capitalism will work it out. And that each of us will pay a security agency to handle our disputes, and that rival security agencies will collaborate and negotiate with each other. And that private courts will be fair to protect their brand.  This overlooks some harsh realities that already exist with capitalism. Customers generally do not have time to purchase based on accurate information for every product. For example, airlines compete almost solely on price. Insurance companies compete on price and provide horrible, sometimes fraudulent service. But customers are left in the dark (who is to say the insurer committed fraud if it disputes it?) Banks operate with gross incompetence and deceipt and are left untouched by the justice system.   We have already discovered that just letting corporations operate without an restrictions creates serious problems. There has to be force that tempers their worst tendencies, even if that force (government) is imperfect.   I remain confused why people think that corporations are somehow more trustworthy and efficient than government agencies. Or that corporations can be used to address externalities. Activist Investor is the entrenched capitalists fake news meme. Trump wants to pass a law that says shareholders don't even get a vote until they pass a certain threshold on ownership % of a company so they can keep all the little people from having any say. Ownership isn't really ownership unless you're rich I guess. Democracy bad! Freedom! America! "It's a front; a farce.  It's nearly suicide for a corporation (which relies on voluntary customers) to say they're ""against"" climate change - interpret that statement how you will.  So they say ""*oh yeah, environment, great stuff, we love it, pollution bad, green good - we'll reduce our CO2*"".  So they find some stupid project, reduce their emissions by whatever-% - ya know, throw a couple spare bucks at it, greenwash the shit out of it.  And probably get half those dollars back as a green tax credit anyway.  Meanwhile, their bottom line and day-to-day operations are largely unaffected.  And the costly stuff - MACT compliance, legislation, taxes - the things that make  environmental responsibility *really*  happen - they want no part of that.  So they pay of their politicians to promote that as ""*job killing*"" and quietly let them haggle over details.  Or better yet - stall indefinitely.  So everybody wins.  Kind of." This creates high levels of efficiency, but is efficiency really what we need?  A robot is very efficient, and increases income, but for who?  When a corporation absorbs another, it does so *with the expectation* that redundant jobs will be shed, and that the income from those jobs will go to the shareholders.  And so one can see where income inequality has it's roots. &gt; People should come before profits.   The entire Corporate Charter process is in United States law. It does say profit comes before people, it's called fiduciary responsibility. I haven't seen any political parties rise around this topic -- so I'd assume corporations hurting people isn't as big as Reddit makes it out? Otherwise most Americans would change how they vote and find a new party? "&gt;""Our support for these (shareholder resolutions on climate risk) proposals is not a matter of ideology, it's a matter of economics,"" he said. ""To the extent there are significant risks to a company's long-term value proposition, we want to make sure there is long-term disclosure of those risks to the market.""  the irony is indescribable" Whether or not you want to abstain or throw away the proxy, one reason it's important to at least read the circular is to find out if any of the proposals deal with increasing the company's common stock.  When this happens, it can dilute your shares and have an effect on your ownership percentage in the company and shareholder voting control.