Why cant “offshore shell corporation” tax avoidance methods used by the wealthy be used by the working class? Is it just because it’s cost prohibitive to set up?
In: Economics
1. It isn’t cost prohibitive but it isn’t inexpensive. The cost might run into the thousands per year at the lowest level so if you’re not saving that much in taxes, it makes no sense.
2. The right kind of income. Domestic wages and salaries cannot be hidden. So if that is where you’re earning most of the income, no luck there – rich or otherwise. On the other hand, holding foreign investment assets and properties, then maybe. Domestic investments and trading income – harder to avoid.
3. Know your end game. Lot of these arrangements are about avoiding estate taxes and such which is relevant if your idea is to pass down a lot of assets. If your end game is living off your investments domestically, these arrangements might be less beneficial.
4. Your own sophistication level and resources. Scammers, fraud etc abound. You do lose protection of domestic laws as well. So there are risks involved and ongoing maintenance. Not for the ignorant – you’ll need lawyers and accountants, trustees etc.
Bottom line though, generally speaking this sort of makes sense if there are tens of millions of dollars of assets in play.
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