Quote:
Originally Posted by Urban Hatemonger
Judging by the comments here I don't think people really understand how offshore tax havens work so allow me to explain as simply as I can.
Let's say you own a business in the U.S.
Now let's assume one year you make a nice profit on that business, you have to pay tax to the U.S. government on that profit, there's no getting away from that so you do so.
So now you have your perfectly legal taxed profit. So what you do is what any sensible business man does, you put it in the bank to gain interest.
Problem is if you do this in an American based bank you're going to get stung for tax again on the interest those profits generate. So you simply register a company on an offshore tax haven such as the Channel Islands, Cayman Islands, Bermuda or Liechtenstein. There you can leave your profits generate high levels of interest and because the money has nothing to do with the U.S. government they can't touch it.
You can also stick your companies assets in there too and then they become exempt from tax too.
And then finally you can choose to re-locate there and then that means you can transfer your companies profits to your own bank account and avoid the government getting their hands on that in income tax as well.
So basically you don't need secret bank accounts or smuggled gold bars because you can avoid paying 2 lots of tax perfectly legally.
Of course it's much more complex than that but that's the basic set up.
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Thank you for this. I was going to post something similar to this after reading the first two pages.
Another thing that I would like to clear up that people have a misconception about.
Income earned from the stock market is NOT untaxed. Sure, it's not fully taxed like regular income but it is still partly taxed. The two taxes that you don't have to pay on income earned through the stock market is social security and medicare tax. You have to pay the other two taxes though.