Grant Cardone's Tax Strategies May Hurt You More Than Help, Says Financial Expert

Real estate mogul and entrepreneur Grant Cardone is known to be vocal about his opinions on federal taxes: He doesn't think they should exist. He frequently shares his views on social media and recently posted an Instagram clip where he shared his philosophy on taxes. He uses several strategies to minimize and avoid paying federal income taxes. While those strategies may appeal to his audience, some financial experts warn that they may not be practical or safe for most Americans. 

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In his Instagram video, Cardone said, "If they (taxes) were zero, this country would rock … I don’t pay federal taxes. My federal tax bill for the last 20 years, I’ve paid maybe two years out of 20." 

He pointed out that if he doesn't have to pay federal taxes, he'll spend and invest the money, putting it back into the local and national economy. 

Cardone criticized the current tax system for repeatedly taxing the same money. He stated that if he earned $1 million, was taxed federally and locally and came away with $500,000 after taxes and he spent that money with another company, that company would be paying taxes on it. After their taxes, the next person or company would pay taxes from what the previous company spent with them – it's an endless cycle that Cardone says could be avoided by eliminating federal taxes. 

However, Cardone stated he doesn't mind paying local taxes, like those on cars, property and making purchases. "But there are so many taxes in this country right now, it's unbelievable," he said.

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Cardone advocates reinvesting profits and using large write-offs to minimize taxable income – strategies he claims have allowed him to largely avoid federal tax obligations.

While these tax-avoiding methods sound enticing, experts argue that Cardone's strategies are tailored for the wealthy and can impose high risks for the average taxpayer. Christopher M. Naghibi, an attorney and executive vice president at First Foundation Bank, has openly criticized Cardone's advice, calling it "self-serving."

"Most of his recommendations conveniently steer people toward services and investments he directly profits from. If it sounds new and sensational, you're probably getting sold something," Naghibi told GoBankingRates.

Naghibi also raised ethical concerns about Cardone's tax strategies. He pointed out that taxes fund essential public services and infrastructure supporting individuals and businesses. Avoiding them, while legal, shifts the financial burden onto others.

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Moreover, Cardone's narrative that "the rich don't pay taxes" can be misleading, according to Naghibi. Naghibi emphasized that Cardone's strategies depend on unique resources and connections that most people don't have. "He's asking people without substantial wealth to mimic strategies designed for those with far more resources and financial literacy," he said.

For those seeking financial independence, Naghibi advises focusing on balanced, time-tested strategies. Creating a plan that aligns with personal goals and circumstances is often more effective than following the advice of public figures whose strategies may not be universally applicable.

"By critically evaluating advice – even from someone as compelling as Cardone – you can avoid the traps of aspirational marketing and chart a path to success that truly works for you," Naghibi said.

While Cardone's tax strategies may work for him, experts like Naghibi caution against adopting them without thoroughly understanding the risks and requirements. 

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