The Loophole Millionaires Use to Pay No Tax

hey 42 here as we speak you are being swindled this year corporations will hide roughly 500 to 600 billion us dollars in corporate tax revenue through legal and illegal means respectively known as tax avoidance and evasion american fortune 500 companies alone are estimated to be sneaking away 2.6 trillion taxable dollars in cozy little islands and or states with flexible taxation laws but that's just big companies you say everyone knows they do that what about your bug standard rich people this video is not about the minefield that is corporate tax avoidance but personal wealth how do the millionaires and billionaires of the world pay little to no tax on their hefty salaries and multi-million bonuses well good old-fashioned rich people have stashed away 8.7 trillion dollars according to conservative estimates more comprehensive estimates stack it up at around 36 trillion dollars that's right 36 trillion dollars in other words the cost of jeff bezos new bathroom refurb although it's popular to do so i'm not going to point fingers at the uber wealthy and scream about how naughty they are for hiding untaxed income because it's easy to look at these statistics through envious eyes and proclaim why should we live in a world where governments allow this to happen but truthfully the situation isn't so black and white at the end of the day you can't have international free markets without enabling the conditions for tax loopholes to exist and free market capitalism is the greatest system ever devised by mankind it has lifted billions out of poverty and no it isn't perfect but it's the best we've got to close every single legal loophole and stop all tax avoidance governments would have to become a lot bigger and more authoritarian and i for one i'm not a fan of that but yes i hear you there are certainly downsides for the average joe to this morally dubious and highly secretive side of free market capitalism there is a hell of a lot of money slipping through the tax man's fingers each year money that could be used to improve infrastructure healthcare education and funding nasa's awesome space explorations for my lovely american viewers this is what we english like to refer to as being mugged off the american translation being a phrase youtube won't allow me to utter the reason these numbers can vary is that well squirreling money away requires sneak 100 you don't want to get caught and so by engaging in the practice you need to employ a hell of a lot of secrecy and discretion that makes you difficult to track these practices can also sometimes be difficult to define tax havens for instance are a favored strategy of the rich and wealthy for protecting their money from the tax man however what actually is a tax haven although there are various definitions in essence it's a location either offshore of across a border where you can hide your money whether you're dodging tricky regulations or trying to avoid criminal liabilities these will likely be your go-to choice and as the billions and trillions of dollars i detailed earlier show they're a go-to choice for a lot of people who it turns out will go to some shocking glimpse to maintain their privacy in april 2016 a whistleblower by the alias john doe my that's an original one leaked 11.5 million documents to the worldwide press all of which detailed financial information for over 200 000 offshore companies who had dealings with panamanian offshore service provider mossack fonseca when analyzed the document showed that countless individuals and companies had used offshore business entities to commit fraud evade tax and even dodge international sanctions the document showed that major banks had helped to drive the creation of well-hidden companies and that 140 politicians and public officials around the world all used panama to hide their money politicians including the king of saudi arabia the prime minister of iceland the prime minister of australia and even some no doubt well-intentioned childhood friends of juan vladimir putin some of the implications were so severe that john doe refused to reveal himself as his life was in danger he only cited that income inequality was his motivation behind the leak and of his decision to release the documents he said i understood enough about their contents to realize the scale of the injustices they described in short he noticed you were getting mugged off and like the decent guy he is he thought he'd let you know the leak helped to bring the tax avoidance slash evasion strategies of the rich to public knowledge as well as the depth of financial corruption that existed in certain governments the papers for instance brought to light numerous fake companies owned by top maltese officials which were being used to conceal wealth but as i said a few moments ago the wealthy involved wanted these secrets kept and the reporter who helped bring these fake companies to light was killed in a car bomb but look i get it inequality only sucks when you're not in on the action being the proactive ambitious and mammon worshiping fortitude viewer i know you are you're not one for protest or complaining you want to know how the rich do it so you can start taking your own slice of that big morally unscrupulous 800 billion dollar tax dodging pie well you've come to the right place there are dozens of techniques to rich use for hiding their money and astonishingly none of them are technically illegal they're just clever financial practices based on national and international laws that were in no way put in place by the same wealthy elites that leverages them wink wink now before we go any further and this should probably be fairly obvious but none of what i'm about to discuss constitutes actual financial advice and you should probably ignore all of it so let's say you've suddenly found yourself 300 million dollars richer naturally your first step would be to grow a glorified yet dignified mustache like mine but after that what would you do with all that money and how would you scribble it away from the praying guys of the government one option would be to buy an unnecessarily enormous super yacht by decking your absurd boat out like a house and spending as little as two weeks per year on it you can pretend for tax purposes that it's a second home you can then rent it out for two weeks per year and you won't have to declare the rent as income and if your new maritime home appreciates in value you can claim it as capital gains and have it taxed at a lower rate capital gains essentially being where an asset you own rises in value before you sell it most common with sought after assets that last for decades such as properties and 42 merchandise genius right and alongside all those tax benefits you also get an enormous environmentally unsound monster yacht that you can staff with the look jewish supermodels and watch my videos on not quite feeling a supermodel laden yacht well you could haves all your money within a corporate entity which would mean for legal reasons your money would be in a lower tax brackets than it would if it was stored in your pocket this means you can pay yourself out of your corporation and if you're creative enough of expenses and how you earn your money you can significantly reduce the tax you pay mitt romney for instance supposedly claimed his management fee for his own company as capital gains i'll let you wrap your head around that one the irs is still attempting to another way you could do it is to use something called a deferred compensation scheme this is dull corporate language that basically means you'll get paid your full salary at a later date so even though you earn the exact same amount of money or more you get taxed less considering the amount you'll be paid will be hundreds of millions who's sweating about a 10-year waiting period it's no wonder 79 of fortune 500 ceos are offered deferred payment plans you can also do something as simple as just swap things around with other people to dodge tax sounds stupid right it's called an equity swap and it is kind of stupid an equity swap allows you to trade the gains and losses on assets without actually transferring ownership which in turn allows you to dodge irritating niggles like transaction costs or even local taxes another strategy would be to take up stock options by putting a huge amount of your money into stock options your money is only taxed when you choose to cash out your options this allows you to choose when and how much tax you will pay at any given time this is the financial equivalent of building up a bar tab with the government but these are all no more than tricks to save a few million bob here and there let's get down to the real meat and bones of how you can hide your enormous wealth from the government and what is that exactly offshore accounts and shell companies let's start with offshore accounts which i spoke about at the start of this video as the panama papers showed offshore accounts are extremely attractive to the rich and powerful and there also conveniently completely legal so long as your government doesn't think you're using them to hide illegal funds or fund illegal activities offshore accounts are perhaps deliberately mind-bogglingly complex this is one of the main reasons why they're so useful if you're trying to hide money if you aren't a tax professional you have little hope of understanding what's happening and where the money is going this is no doubt why when the panama paper scandal was exposed countless rich and powerful figures simply held up their hands offered a bemidji smile and said hey i just signed some paper i had no idea what it all meant but so you can profit from the same blissful ignorance i'll simplify it for you as much as possible offshore accounts are based in tax havens which are countries with little to no taxes that offer complete financial discretion sounds good now here's how you do it let's say you want to protect your 300 million dollars the first thing you want to do is set up an offshore account in a tax haven sometimes this will require you to have citizenship there but as your pockets are literally leaking dollar bills this shouldn't be an issue just stuff some of them into the palm of the nearest corrupt official and what do you know you're a newborn panamanian swallowing around in white linen shirts and a straw hat but setting up an offshore account isn't enough you want secrecy you don't want anyone to know it's you who owns this offshore account after all many regions such as the us the eu and russia will slap you with hefty penalties and legal charges if they spot your making income from a foreign account so what you need to do is set up a limited company or trust in your tax haven with a nominee stockholder or rather stooge who appears on public documents as the owner whilst you sit margaritas on the beach operating behind the scenes as an unexposed beneficial owner enjoying your tax dodged income as the internet will tell you this is exactly what the illuminati does with the united states to access your money you can set yourself up as a contractor for the company wire your millions over to it and then take it out as multiple loans or one loan to yourself alternatively if you don't need it right now you can start using it within the company to invest and grow your money to make further tax dodged millions genius right well that's a step further because if you really want to hide your money and everything you've bought with it such as private jets and luxury houses then you're going to want an intricate array of shell companies that is meaningless fake companies that exist around the world to disguise what it is you're actually doing with your money shell companies exist only on paper and typically have no office and no employees but can be used for a variety of means from money laundering to tax evasion to serving as a vehicle for business transactions despite possessing nothing to actually trade let's take an example with your millions you buy a private jet something the tax man likes to obliterate with vat being the 42 subscribe tax dodger that you are you already own a company in a tax haven we'll call this mustache incorporated using mustache incorporated you will purchase the private jet and then import it to another company you've created which then leases it to an agent who then allows you to use your plane but here's the thing if your offshore companies are based in a notoriously tax-lenient isle of man this allows your private jets value-added tax to be completely refunded a figure which can be as high as 20 percent of the value of the aircraft itself so now you can fly around the world in your mustache emblazoned plane without paying a penny in v80 for your extravagantly luxury item and all you had to do was create a string of meaningless pointless businesses moriarty himself would be in awe although as is often the case with these things the conditions surrounding this legal loophole seems downright petty according to the international consortium of investigative journalists f1 star lewis hamilton treated himself to a brand new 27 million luxury private jet but with the help of the legal wranglings of a law firm in bermuda he received his eye-watering vat refund of 5.2 million dollars the legal condition was that for his new plane's inaugural flight it had to first touch down in the isle of man and stay there for no less than two hours as long as tax havens that allow for complete financial secrecy exist these sorts of financial practices will continue and luckily for you new tax havens continue to emerge the u.s state of south dakota for instance shields your money from the government ex-spouses business partners income tax inheritance tax and capital gains tax it's no wonder that assets held in south dakota trusts have swollen from 50 billion to over 300 billion over the last decade a fact which has no doubt made south dakota's famous mount rushmore residents turn in their graves so if you've got millions don't pay your share of tax like anyone else hide it away and enjoy it and if people start snitching on you consider blowing them away with a car bomb as michael corleone like to say it's not personal it's strictly business thanks for watching you can now pre-order my new book stick a flag in it on amazon link in the description thank you

Channel: Thoughty2

Views: 567,733

Rating: 4.9002967 out of 5

Keywords: wealth, rich, wealthy, tax haven, tax avoidance, tax evasion, panama papers, taxation, millionaire, billionaire, money, how to build wealth, how to get rich, building wealth, abundance, prosperity, how to make money, how to become rich, rich people, how to be a millionaire, money magnet

Id: j__q1PevAmk

Length: 17min 4sec (1024 seconds)

Published: Wed Aug 26 2020