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Why would you bother going offshore if capital gains are taxed very low in most countries? For example, wealthy heirs can live their entire life, not paying a c

Why would you bother going offshore if capital gains are taxed very low in most countries? For example, wealthy heirs can live their entire life, not paying a cent of income tax. Life is good if you can earn money by just booking capital gains. Should the capital gains tax rate be higher, i.e. 50%, I dare bet the numbers would be a lot higher. Higher rates act as an incentive to avoid.

darawk 10y ago
I think the main reason would be the estate tax. That's a huge, huge cost for inherited wealth. Maybe there is some way around that that doesn't involve offshoring, but that seems like a pretty big reason to me.
- deleted 10y ago
  [deleted]
- danieltillett 10y ago
  Yes you put everything into a trust and get your “friends" in congress to pass a law getting rid of the estate tax for 6 months and have the trust “die” and then set up a new one [1]. They almost got away with it [2]. 1. https://en.wikipedia.org/wiki/Economic_Growth_and_Tax_Relief_Reconciliation_Act_of_2001#Estate_and_gift_tax_rules https://en.wikipedia.org/wiki/Economic_Growth_and_Tax_Relief... 2. https://en.wikipedia.org/wiki/Tax_Relief,_Unemployment_Insurance_Reauthorization,_and_Job_Creation_Act_of_2010 https://en.wikipedia.org/wiki/Tax_Relief,_Unemployment_Insur...
- daveguy 10y ago
  I wouldn't call it a huge, huge cost. In the US it is the equivalent of being in the higher tax bracket on the portion that falls above the exclusion amount. If the value of the estate is $5.45 million or less then you pay zero in estate taxes. ZERO. Only the top 0.2% of estates pay any estate taxes and that is only on the value above the exclusion amount ($5.45 million).
  - darawk 10y ago
    Ya I was talking specifically about for high-net worth individuals, though. If you are worth 100 million, you're paying ~50 million in tax when you die. That's certainly worth sheltering.
    - daveguy 10y ago
      or ~37.8 million, but ya. If your net worth is 100 million your kids should definitely get 100 million instead of 62 million. They practically earned it and definitely deserve it for being your kids. You wouldn't want them to wind up destitute. Tell me this. If you hired your kids for a year and paid them 100 million dollars to do the job of being your kids how much would they pay in taxes? The answer is about $40 million. In the US transfer of wealth is taxed whether its salary or just for the sake of little Johnny. Loopholes should be closed (if they were even legal loopholes to begin with).
      - darawk 10y ago
        ? You're arguing against something I didn't say. I wasn't saying they should shelter it, or that they deserve to keep it. I'm saying that they're strongly incentivized to, so it makes sense that many of them would attempt it.
        daveguy 10y ago
        +2 it's a good point. Closing loopholes and enforcing large fines should help disincentivize the sheltering. If the loopholes are legal, just closing them will help tremendously. I am sure that "legally save me as much money as possible" is a common phrase heard by CPAs.

darawk 10y ago

I think the main reason would be the estate tax. That's a huge, huge cost for inherited wealth. Maybe there is some way around that that doesn't involve offshoring, but that seems like a pretty big reason to me.

deleted 10y ago
[deleted]
danieltillett 10y ago
Yes you put everything into a trust and get your “friends" in congress to pass a law getting rid of the estate tax for 6 months and have the trust “die” and then set up a new one [1]. They almost got away with it [2]. 1. https://en.wikipedia.org/wiki/Economic_Growth_and_Tax_Relief_Reconciliation_Act_of_2001#Estate_and_gift_tax_rules https://en.wikipedia.org/wiki/Economic_Growth_and_Tax_Relief... 2. https://en.wikipedia.org/wiki/Tax_Relief,_Unemployment_Insurance_Reauthorization,_and_Job_Creation_Act_of_2010 https://en.wikipedia.org/wiki/Tax_Relief,_Unemployment_Insur...
daveguy 10y ago
I wouldn't call it a huge, huge cost. In the US it is the equivalent of being in the higher tax bracket on the portion that falls above the exclusion amount. If the value of the estate is $5.45 million or less then you pay zero in estate taxes. ZERO. Only the top 0.2% of estates pay any estate taxes and that is only on the value above the exclusion amount ($5.45 million).
- darawk 10y ago
  Ya I was talking specifically about for high-net worth individuals, though. If you are worth 100 million, you're paying ~50 million in tax when you die. That's certainly worth sheltering.
  - daveguy 10y ago
    or ~37.8 million, but ya. If your net worth is 100 million your kids should definitely get 100 million instead of 62 million. They practically earned it and definitely deserve it for being your kids. You wouldn't want them to wind up destitute. Tell me this. If you hired your kids for a year and paid them 100 million dollars to do the job of being your kids how much would they pay in taxes? The answer is about $40 million. In the US transfer of wealth is taxed whether its salary or just for the sake of little Johnny. Loopholes should be closed (if they were even legal loopholes to begin with).
    - darawk 10y ago
      ? You're arguing against something I didn't say. I wasn't saying they should shelter it, or that they deserve to keep it. I'm saying that they're strongly incentivized to, so it makes sense that many of them would attempt it.
      - daveguy 10y ago
        +2 it's a good point. Closing loopholes and enforcing large fines should help disincentivize the sheltering. If the loopholes are legal, just closing them will help tremendously. I am sure that "legally save me as much money as possible" is a common phrase heard by CPAs.