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The Secret IRS Files: How The Wealthiest Avoid Income Tax

edited June 8 in Other Investing
Can't vouch for the sourcing or the math but thought this was interesting:

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The Ultrawealthy






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  • edited June 10
    Too much for me to digest tonight. But I trust ProPublica. On YouTube, I've run into a guy who runs a business geared for the ultra-wealthy. He helps them strategize about how to hide money from the tax man. It can get extreme. He mentions that there are countries around the world that SELL citizenship, for a donation into a "National Fund." Alternatively, you could buy and hold real estate for at least 5 years. Then, after 5 years, you could apply for citizenship there. (Until then, you're granted a 5-year "golden visa," residency permit.) St. Lucia. Vanuatu. Dominica. Granada. Trinidad & Tobago. Serbia. Montenegro. Portugal. Ireland. (Got that one covered.) Even Egypt.

    This guy recently RENOUNCED his US citizenship. THAT will take care of the higher US tax in a big way..... He chose St. Lucia.
  • It isn't as easy as it sounds. They make it difficult for you to renounce your US citizenship. If your net worth is over 2 million$, then they make you pay all of the tax that you could possibly pay. Then you are liable for taxes for 10 years after you renounce. Plus, it's not like these other countries will let you get away with paying no tax. Maybe in the Caribbean, but that could change. So you renounce, pay a huge amount of taxes to the US, and are liable for the next 10 years. In Portugal, they have a special deal where you don't get taxed on your foreign income as long as it can be taxed in your home country. That plan is good for 10 years.

    The guy you mentioned is Andrew Henderson from Nomad Capitalist. It sounds like he isn't a tax resident anywhere since he has 3 or four homes around the world. He renounced his US citizenship. I guess it can be done legally, but everything is subject to change. Anyway the ultra rich don't need to worry because they get away without paying much tax legally.
  • I think this "true tax rate" is ridiculous headline generating nonsense. They take the total unrealized gain of public companies stock and then claim Buffet and Bezos, etc should have paid taxes on that number. They may be "worth" that on paper but these are unrealized gains, not money in the bank.

    Under this theory, we would all have to pay taxes on any unrealized gains, including the appreciation in your own real estate. If property values fall would the government give us a rebate?

    Buffet's income tax rate is 24/125 or 19%. I agree this is low, but so does he. Buffet has always said that the tax system is stacked in his and other millionaires favor.

    Wealth taxes have been tired and abandoned in Europe as ineffective. What we need is a simpler tax system, that makes it harder to game, and better audits and enforcement
  • It isn't as easy as it sounds. They make it difficult for you to renounce your US citizenship. If your net worth is over 2 million$, then they make you pay all of the tax that you could possibly pay. Then you are liable for taxes for 10 years after you renounce. Plus, it's not like these other countries will let you get away with paying no tax. Maybe in the Caribbean, but that could change. So you renounce, pay a huge amount of taxes to the US, and are liable for the next 10 years. In Portugal, they have a special deal where you don't get taxed on your foreign income as long as it can be taxed in your home country. That plan is good for 10 years.

    The guy you mentioned is Andrew Henderson from Nomad Capitalist. It sounds like he isn't a tax resident anywhere since he has 3 or four homes around the world. He renounced his US citizenship. I guess it can be done legally, but everything is subject to change. Anyway the ultra rich don't need to worry because they get away without paying much tax legally.

    YES, that's the guy. He never mentions all of the specifics you detailed. SHIT! Can the IRS really do that to someone? I have no sympathy for the uber-wealthy, but there must be limits upon what they can demand..... Henderson said that he renounced in some foreign US Consulate or Embassy, and they all were quite professional and considerate. And that was that. Wow. ...Yes, he owns homes in a few countries, recently got married. With the St. Lucia citizenship, he'd need a visa to come visit the USA again...
  • Another angle on our system of taxation (interpreting the fine print in an occasional Schedule K-1 is as close as I come to this approach):

    Private Inequity: How a Powerful Industry Conquered the Tax System



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