Let’s say I’m a struggling, but very well off, businessman in the resort and hospitality industry. I have golf resorts around the world, but all of them are losing millions of dollars every year, such that it almost seems intentional. On the bright side, I don’t have to pay much (or anything) in taxes, since I’m losing money every year.
Why not run a profitable resort? Is the tax penalty for running a successful business really that much worse than the millions of dollars in losses?
How am I enriching myself here? Am I actually just laundering money? How does this stuff work?
**Edit:** Ok, this is making a lot more sense after just a few responses. Followup question, what kind of criminal charges might be brought against me, if it turns out I am actually lying about my business’s profitability and, my tax liability, and have been doing so for years?
In: Economics
Let us say I am a crooked business man with political influence, with some clever accounting I can make it look like my business isn’t making any profit in years when taxes are relatively high, then I can get someone elected who will lower business taxes and then with more creative accountancy have those profits from earlier years show up in the years of low taxation.
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