[atonse]

I’ve had this very cynical idea for a while now. And that is, the only way we will get governments to stop this nonsense is if we democratize the extreme tax evasion... ahem ahem.. sorry, “smart tax planning” that these companies take advantage of.

Perfect opportunity for the Stripe Atlas team :-)

If you make it so an individual can pay $50 a month and they get this full double Dutch Irish sandwich shell company crap setup for them, and millions of citizens start to get incomes this way and pay their “lawful amount” rather than their fair share, then governments will start to clamp down.

Because right now we (private citizens who pay 25-40% in income taxes) are powerless in convincing our governments to do something about this travesty.

Thoughts? Remember, as these companies say with their weasel words “we pay the full taxes we owe!” So it would be legal.

[xmodem]

That would be funny, but I think if you actually tried to do it, you would very quickly run into overheads which make it unviable for most individuals. A lot of tax havens outsource the cost of compliance by requiring all financials to be independently audited, for instance, and when you have a couple of layers of shell companies that's 15-20k right there.

That, and you probably still end up having to pay income tax on it when you bring it into the country.

[paulddraper]

Exactly. And that is why you won't see small or even mid-sized companies arranging their taxes like this: it's just too expensive.

Only big companies -- Apple, Nike, Amazon, Google -- can afford to save international taxes like this.

IMO, the better solution is 100% sales tax (ala the US FairTax proposal https://en.m.wikipedia.org/wiki/FairTax). Companies avoid paying corporate income taxes far easier than avoiding sales tax.

[brokenmachine]

How many individuals would we need in order to make it worthwhile? Asking for a friend.

Maybe we could work together with people in another country - because we all want to pay "the full taxes we owe".

[paulddraper]

...how many people do you file taxes with?

[turc1656]

Several thoughts on this. First, this is legal tax avoidance, not evasion which is actually illegal. Yes, it sucks, but it's completely legal, which you mention, but the terminology is important.

Second, I've thought of something similar for a different tax issue but didn't pursue it because I would probably run into a million legal and political problems. I had considered trying to legally deprive the state where I live of taxes on the sale of vehicles. I came up with a plan to use an intermediary and a set of contracts that are similar to stock options to allow pass through premium for the contract to flow though the intermediary for what would amount to basically 99.99% of the total cost and then exercise the contract for $1. So $1 would be the purchase price, the intermediary gets a small fee, and then remits the rest of the flow through premium to the entity selling the vehicle. In this manner, the total cost remains the same, and the profit of the dealership remains unchanged (less the small intermediary fee) and therefore their corporate tax would be unchanged. But since the purchase price is $1 no sales tax would need to be paid. I didn't pursue it because 1) I'm not a lawyer and 2) this would put a giant target on my back for the corrupt trash that runs my state to aim for.

Lastly, I think your thought is good but wouldn't pan out because in the end individuals can't not receive income wherever they live. So if you receive that income in your home country, you are paying income tax on it. These companies are able to have special laws that apply because they simultaneously exist in multiple locations. And they have an entirely different set of tax laws than those that apply to individuals. So this doesn't seem possible. The way I think this should be done is to apply a flat rate on top line revenue of, say, 2%. This can't be avoided because the tax is incurred simply by doing business in the country. That's basically the equivalent of making sure they are paying some minimal amount to access the market. Then the rest of the income tax laws can still apply and corporations can offset their income tax with whatever has been paid via this top line revenue tax.

[pkaye]

The average person gets most of their income through wages and it very hard to shelter it through these schemes.

[atonse]

So this is where you change things.

You get a company out of this service, and then you tell your employer to actually pay your company. The good thing is that they save on various payroll taxes, so they should actually kind of be ok with it, right?

Again, this is all kinds of rotten, but I don't know how else we can raise the attention of lawmakers _around the world_, but put the tax-planning power of billion dollar corporations in the hands of individuals.