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Thread: noose grows tighter for US 'offshore' tax evaders

  1. #26
    Banned Melonie's Avatar
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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Odd, though, that you have denigrated the corporate tax rates for large corporations, and now you're complaining about rates for smaller corporations, when they are subject to the same tax laws.
    This is absolutely false. It is 'legal' for Microsoft to avoid US corporate taxes by establishing 'shell corporations' in Ireland for international software sales. As long as they leave their profits 'offshore' no US tax is due. But for a small business owner or individual, similar profits left 'offshore' ARE subject to US tax and similar 'offshore' shell companies are illegal. In fact, one of the main avenues of investigation for the UBS account holders will be their attempted use of Hong Kong shell companies.

    However, all of this is really beside the main point, which was a question as to whether a gov't has a responsibility to 'limit' it's total burden on businesses large or small to the point where it is still possible for those businesses to operate profitably in the absence of bad judgement and blatant mistakes.

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    Banned Eric Stoner's Avatar
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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Quote Originally Posted by Deogol View Post
    Shit, after my company is done paying all the costs with having employees we don't have any money to squirrel away!
    I have those costs too. I pay salaries and benefits to 7 other people. Including a health plan.

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    God/dess threlayer's Avatar
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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Quote Originally Posted by Melonie View Post
    This is absolutely false. It is 'legal' for Microsoft to avoid US corporate taxes by establishing 'shell corporations' in Ireland for international software sales. As long as they leave their profits 'offshore' no US tax is due. But for a small business owner or individual, similar profits left 'offshore' ARE subject to US tax and similar 'offshore' shell companies are illegal. In fact, one of the main avenues of investigation for the UBS account holders will be their attempted use of Hong Kong shell companies.
    You are saying the size of a corporation ALONE determines whether offshore profits are taxed in the US? Hmmm. Too bad there is not a way currently to tax offshore profits allocatable to the main corporation. Maybe tax laws need to be changed for 'shell' corporations.

    Quote Originally Posted by Melonie View Post
    ...whether a gov't has a responsibility to 'limit' it's total burden on businesses large or small to the point where it is still possible for those businesses to operate profitably in the absence of bad judgement and blatant mistakes.
    It would be smarter if there were a way to optimize the total income to both the business/shareholders and the government. But no one seems to know enough of the mechanisms involved to do that. So I guess it has to be the squeeky wheel versus the oversight.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Banned Eric Stoner's Avatar
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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Quote Originally Posted by threlayer View Post
    You are saying the size of a corporation ALONE determines whether offshore profits are taxed in the US? Hmmm. Too bad there is not a way currently to tax offshore profits allocatable to the main corporation. Maybe tax laws need to be changed for 'shell' corporations.

    It would be smarter if there were a way to optimize the total income to both the business/shareholders and the government. But no one seems to know enough of the mechanisms involved to do that. So I guess it has to be the squeeky wheel versus the oversight.
    Some corporations lobbied Congress to obtain favored tax treatment.

    If you want to see higher corporate income and higher tax revenues then you ought to support a lower corporate income tax. Currently, only Japan has a higher rate than the U.S.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Quote Originally Posted by Eric Stoner View Post
    Some corporations lobbied Congress to obtain favored tax treatment.

    If you want to see higher corporate income and higher tax revenues then you ought to support a lower corporate income tax. Currently, only Japan has a higher rate than the U.S.
    Now that would be stupid of me. Because to make up the differnce, they would raise my personal taxes.

    Tax favored treatments. Wouldn't you know it? Wonder if that affected campaign contributions???
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    MEL:

    IMO The microsoft and irreland example is flawed. Micro soft is "hiding" if you will the the profits of it's business conducted OUTSIDE the US but the extreme vast majority of the "small businesses" you are so worried about who establish accounts in the caymans or where ever do NO business outside the US they are hiding the profits of business conducted inside the US and that is totally different.

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    Banned Melonie's Avatar
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    Default Re: noose grows tighter for US 'offshore' tax evaders

    ^^^ that is an all too convenient play at semantics. Microsoft writes software in the USA, transfers that 'asset' to Ireland, earns profits from that 'asset' ( i.e. sales to foreign customers) - yet those profits are not taxed by the US gov't as long as they remain in Ireland. In contrast, a US small business owner or 'rich' person manages to save up an investment nest egg, transfers that 'nest egg' to the Cayman Islands, invests that 'asset' into worldwide securities via a Cayman Islands corporation / broker and earns profits - yet those profits ARE taxed by the US gov't even though they remain in the Cayman Islands.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    If MSFTs Ireland's 'shell' corporation (and those of other large corporations) is not a completely separate, hands-off corporation, why is this allowed? Who foisted this into the US tax laws and do other capitalist countries allow it? Some discussion was made of stopping this stupid practice in the Obama govt (or Congress) and this forum's conservatives objected to this idea. And yet this would help the US and the rest of us taxpayers.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Mel

    IMO it is more than semantics. I am NOT talking about and individual IE Bill Gates or Paul Allen to stay with the microsoft theme taking X million of there PERSONAL funds or as you put it "nest egg" and investing it via a Cayman islands firm into a non-us based enity and getting a return.

    I am talking about some "Joe the Plumber" or again microsoft a business small or otherwise and to make my example valid this business does NO business, actual business outside the US and simply has a P.O. box in the Cayman islands, incorporates in the Cayman islands and has a bank account with UBS or who ever there but actually conducts all his/her face to face or "teller" contact at the local branch in Miami or where ever but for tax purposes tries to maintain that he/she does no business in the US and as such owes no taxes when clearly ALL the business conducted by what anyone would normally called a US firm, a firm owned by a US citizen is in fact conducted in the US and those profits however much they are should be subject to tax at what ever rate.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    A few more thoughts:

    First that rich investor seeking a "tax free" investment has plenty of investments to choose from in the US municipal binds etc that are tax free and 100% legal they may not get the treasury any funds but they do keep the capital in the US and that is the accepted "trade-off" they may not pay high rates of return but if higher returns are the goal again there are many investments available for that as well, you just have to pay taxes on them.

    It seems like we are talking about a class of "investors" that want to have there cake and eat it to high returns and have it be "tax free"

    I can think of three examples:

    Three plastic surgeons from Miami, all US citzens, they all make the same amount of money.

    The first conducts no business outside the US no investments nothing just via the method I described above tries to maintain that his "company" does no business in the US, even though his/her clinic is phyically located in Miami, all the boobjobs or whatever he does are done there and all services are paid for in US dollars and the transaction takes place in Miami and those funds are deposited in the local Miami branch of UBS or whoever.

    The second is the "investor" who is only trying to avoid taxes as Melonies states, again it is my position that plenty of tax free instruments are available to him inside the US.

    The third is a DR. that has or uses a clinic in the cayman islands maybe to escape the long arm of the FDA so he can do "professional sized" boob jobs or maybe provide "silly string" to to Melonies " daughter" so to speak" he there one day a week, oh lets say a Thursday, does a 3 or 4 surgeries, stays over at his house/condo boat or whatever, with his wife/GF or somebodies wife/GF or some local talent, flies back to Miami Sunday night. He keeps his business, busines he actually conducts in the caymans totally seperate, seperate bank accounts not co-mingling of funds and the caymans clinic does not share any resourses, employees, supplies etc.

    As long as the DR. spends those cayman island funds outside the US and does not bring the results of that spending a boat or any other asset into the US or try to use his cayman isalnd account to pay either business or personal bills originating in the US then the "microsoft model" would and should apply.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Munis are not state tax free, unless your state exempts bonds issued by entities in that same state. Your exemption depends on your total (fed, state, city) marginal tax rate. Plus they do not pay all that much, according to some.

    For mgfr industries, a more likely target, that auxulliary business might be in India or China.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    T

    My point on that was/is that there are 100% legal methods to exist to invest in the US and get tax free interest, just find those that are exempt in your state. Do they typically pay less? Yes, but that is the trade off, which do you value more tax exempt or higher rates what we have from people subscribing Melonies theory is that they want/need to have there cake and eat it too.

    Trouble is it's not just strictly speaking legal or "right"

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    I vote for US citizens not being traitors to their country.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Loopholes for the very rich or the biggest corporations just cause anger among honest taxpayers. I hope Obama's regime closes these unfair loopholes to the extent that they do exist.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    ^^^ I agree totally that the closing of ALL tax loopholes would be a fair approach. I suggest they start with the 'Earned Income Tax Credit', which allows some 40% of US workers to avoid having to actually pay anything towards income tax.

    ^^^ on the subject of offshore 'income', this is still a matter of semantics. I'll throw out yet one more revision to the example. If an upper middle class US worker manages to save up $100,000 ( fully declared and taxes paid), and invests it via a US stockbroker into stocks of foreign companies, the passive income resulting from those stocks is fully taxable. On the other hand if the same (fully declared and taxes paid) $100,000 is invested with an 'offshore' stockbroker in the same foreign companies, the passive income resulting from those stocks is fully taxable as well for an upper middle class US worker even if it originated from 'foreign' business activity and even if it remains in an 'offshore' brokerage account. The point is that, just like the Irish shell corporation example, the income was produced from non-US investment activities and was not brought back into the USA. In the case of a large corporation, the income is US tax exempt ... but in the case of a small business or individual, the income is fully taxed by the US.

    As long as the DR. spends those cayman island funds outside the US and does not bring the results of that spending a boat or any other asset into the US or try to use his cayman isalnd account to pay either business or personal bills originating in the US then the "microsoft model" would and should apply
    You're talking about 'active' income ... which is very different from 'passive' income. Where active income is concerned a US income tax exemption applies up to the $91,000 per year 'foreign earned income' exclusion level ... which your theoretical plastic surgeon would quickly exceed thus facing the same effective US tax rates for performing additional surgeries in the Cayman Islands as in the USA.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Melonie

    Yes I am talking about "active income" which is as you say very different from "passive" income but that is also why I have said from the start that your Microsoft-Ireland example is flawed. MicroSoft-Ireland is an actual business they deliver actual goods, software in their case and the result of that is they make "active" income.

    It is not just an "investment house" that buys and sells stocks for Bill Gates and Paul Allen

    If either of them invested through the Caymans the profits of there investment would and should be subject to US taxes

    If I understand it your argument seems to be that because microsoft or my Miami DR. can establish offf shore companies which do business outside the US, busineses that deliver goods and services in exchange for "active income" which can then be kept outside the US IE the business does not need to pay the DR. at all certainly not more than 91K/yr. but can leave the balance in the bank or "on the books" that any US investor who never leaves his desk in the US who invest in non-us investments via the Caymans should also enjoy this same advantadge.

    A few things:

    The US government has always treated active and passive income differently to some degree, capital gains sound familar? Also if you had your way NO ONE would invest in US based investments/companies, if it were just as easy and these days it is to invest outside the US and have it be "tax free" US companies would be starved for capitol and that would not be a good thing so why would/should the goverment aid in that?

    If this passive income is kept in the Caymans and NEVER brought into the US how does this investor ever get to spend the money? Or are we talking about a situation where after 30 years the guy/gal goes and lives "south of the border" somewhere, they IMO quit being an American so he/she can then spend all his/her tax free money? If this is the plan from day one then why should the US goverment assist you in that?

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    ^^^ again a distortion ^^^ The issue is one of international 'fairness' ... as the USA is the only major country which attempts to tax the 'foreign income' of its citizens in the first place.

    I would also point out that there is a major difference between an American citizen squirrelling money into an offshore bank account while still residing in the USA ( and thus consuming US gov't services ) versus an American citizen relocating themselves and their money offshore ( and thus NOT consuming US gov't services ). The EU and Commonwealth countries recognize this key difference ... the USA does not.


    My point on that was/is that there are 100% legal methods to exist to invest in the US and get tax free interest, just find those that are exempt in your state.
    Arguably, this is the second major point behind the recent increase in tax enforcement against the 'rich'. The US gov't and US states very badly need 'new' investors in their bonds so that they can continue to spend money like arguable drunken sailors, and former foreign buyers ( i.e. Chinese, Japanese, Saudis ) are becoming increasingly distrustful of America's actual ability to repay ( in terms of real 'value' not just freshly printed dollars ).

    The US gov't also has selected certain favored industries into which it wants to encourage private investment regardless of the actual ability of those industries to turn a profit and thus reward private investors. Thus the US gov't has enacted tax favored mechanisms which reward private investors via tax credits and tax deductions which can be used to offset other sources of taxable income for such favored industries as ethanol, solar, wind etc. It will be curious to see which other favored industries may be added to the tax favored list in the future ( GM and Chrysler perhaps ? ).

    However, all of the above arguably encourage investment in areas that distort natural economic forces, and at the same time deprive other areas / industries of potential investor capital which could have been used for expansion / increased efficiency / increased international competitiveness.

    ~
    Last edited by Melonie; 08-23-2009 at 05:40 PM.

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    Default Re: noose grows tighter for US 'offshore' tax evaders

    Quote Originally Posted by Melonie View Post
    ...an American citizen squirrelling money into an offshore bank account while still residing in the USA ( and thus consuming US gov't services ) versus an American citizen relocating themselves and their money offshore ( and thus NOT consuming US gov't services ). ...
    Did this American citizen relinquish citizenship and thus the ability to receive US benefits on demand?

    Quote Originally Posted by Melonie View Post
    The US gov't also has selected certain favored industries into which it wants to encourage private investment regardless of the actual ability of those industries to turn a profit and thus reward private investors. Thus the US gov't has enacted tax favored mechanisms which reward private investors via tax credits and tax deductions which can be used to offset other sources of taxable income for such favored industries as ethanol, solar, wind etc.
    The Tax code has MANY MANY tax preference items built in. I vote to eliminate all of them to the extent that our international trading "partners" do.

    Quote Originally Posted by Melonie View Post
    However, all of the above arguably encourage investment in areas that distort natural economic forces, and at the same time deprive other areas / industries of potential investor capital which could have been used for expansion / increased efficiency / increased international competitiveness.
    As do ALL the tax credits you have been explaining here.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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