And how do those at the top buy those mansions and estates. I can’t imagine they’ve got a mortgage nor can I imagine then paying in heaps of cash
In: Economics
They launder money. By that I mean, they purchase legitimate businesses to act as a “front.” Usually businesses that mainly operate with cash.
So let’s say I’m a successful drug dealer (Just to clarify for the record, I am NOT lol). I sell a lot of drugs and work only with cash. Let’s say I’m bringing in $10k/month with my illicit business. That money can’t go into a bank account, because the IRS is gonna shit their pants when they see it and try to figure out where it came from.
A year later though, I have $120k. Now I can purchase a “legitimate business.” So maybe I decide to open a donut shop or something. The donut shop might not be super successful, but I can start funnelling that drug money into the books at the donut shop and pretend that I now own a profitable donut shop in the city, when in reality most of the “profits” come from illegal activity. As long as you go slow and don’t get crazy with your deposits, the IRS doesn’t pay attention. So in other words if I deposit $3k a week of the drug money, I’m good. If I try to deposit $20k a week though, that’s suspicious because no donut shop is taking in $20k per week.
So that’s money laundering. Of course at this point I’m paying taxes to the IRS on my “legitimate” income, but if I’m bringing in that much money from my illegitimate business, I’m not worried about taxes. The government gets their share and they leave me alone unless I do something stupid, such as trying to deposit $20k per week from my tiny donut shop, which would make no sense financially.
Also I realize that I just rambled and didn’t actually answer the question. So how are the employees paid? They’re often paid in cash. Whatever they choose to do with that cash is on them. OR the more likely option is I put them on the payroll at my “donut shop” and give them legitimate paychecks for “working” there. Even though they don’t actually come to the shop and make donuts, they just sell drugs for me instead.
There’s a fried chicken place right up the road from me. I’m pretty sure it’s a front. I drive past it every day and it’s always open but I’ve never ever seen a car in the parking lot. No customers, no employees. It’s just there, and yet somehow it makes enough money to stay open. Obviously I’m speculating here, but I can’t fathom how a restaurant can stay open all day and not bring in a single customer unless there’s some illegitimate cash coming in.
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