How to avoid TAXES like the RICH

How to avoid TAXES like the RICHShow more

There are a lot of ways the rich spend their money. But how do they get all this money? Where does it all come from? And more importantly, in a country that’s intent on taxing every cent you make, how do they stop it all from falling into Uncle Sam’s hands? My name is Andrew, and welcome to Alecus.

In today’s video, we’re going to talk about where the rich hide their money.
The tax loopholes, the shady side dealings, and shell corporations, and the bizarre industries you’d never think are propped up almost entirely by the tax-dodging habits of the elites.

Welcome…to How the Rich Hide their Money.

How do the Rich Avoid Paying Taxes right here in the States?

When we think of tax evasion, we usually think of the rare finance mogul making deals with a shady accountant in some back alley. But the truth is, most of the world’s super-wealthy elite use creative techniques to avoid paying some or all the taxes they’d otherwise owe.

Let’s start with some basic tax theories.

Taxes aren’t just put there by the government to make money off its citizens. That is the main function of taxes of course, and the government does need to charge the people who live here if it wants money for things like schools and bridges and roads, but what the government chooses to tax, and not to tax, can be a reflection of what society wants to incentivize or discourage.

Ever since the Uniform Conservation Easement Act was passed, landowners with huge tracts of land can dedicate chunks of their land for the goal of preserving and revitalizing the natural ecosystems that once flourished there... for a tax break.

There are a few other ways that the rich- or really anyone- can avoid paying taxes without opening an account in the Cayman Islands. If you invest in municipal bonds, for example, you don’t have to pay federal taxes on your earnings. In a similar vein if you buy treasury bonds you don’t have to pay state or local taxes on your earnings.

You can open a life insurance policy if you want to be able to pay taxes upfront on a sum of money and then invest and later withdraw that money tax-free. Same thing with a ROTH IRA.

These are all ways rich people can and do avoid paying taxes, and honestly, you should too if you have enough money to do it. But there are other ways the rich avoid taxes that are reserved only for people at the top of the economic food chain.

How do the rich hide their money?

IRAs and donations to charity are valid ways to not have to pay taxes, but they’re open to everybody.

How do the rich actually dodge taxes?

The most stereotypical answer, “offshore accounts in the Cayman Islands”, is such a common response for a reason. It works. And the rich really do it.

Places like the Cayman Islands and Switzerland are known as tax havens. They’re places with little to no tax liability, and with a history of unwillingness to report the information of anyone with a bank account there to American authorities like the IRS or the SEC.

One Financial Secrecy Index, produced by the Tax Justice Network, estimated that somewhere between 21 and $32 Trillion are stored in jurisdictions like the Cayman Islands, which are sometimes called “secrecy jurisdictions”.

One other less-than-favorable way the ultrarich hide their money is by using shell companies.

If somebody owns a series of shell companies, that is a fake company that gives its money to another fake company, and their name isn’t specifically attached to any of those companies, it can be really difficult for law enforcement to trace that money and make whoever’s money it is paying their taxes.

There are also freeports. Freeports are like offshore bank accounts but for commodities.

Freeports aren’t the only tax loophole that art gets you access to.
Have you ever wondered why paintings sell for so much money, even if they’re not all that good?

The answer is because art can be donated, and donations can reduce your tax burden. The world’s wealthiest people will often buy art, get it appraised at ludicrous amounts of money, then donate that art to a charity of their choice (maybe even their own).

How can I hide my money like the rich?

Unfortunately, it’s difficult to avoid paying taxes if you’re not super-wealthy. The average American needs a significant portion of their paycheck to eat, pay rent, pay off their car and send their kids to college.

You could try to open a bank account in the Cayman Islands to store your extra $5,000 in savings without paying taxes on them, but for all that trouble you’re maybe only saving $1,000 a year in taxes if that.

If you enjoyed this video, hit the Like button and comment below. Let us know why you think the rich stay rich while the poor can’t seem to catch up. Also, remember to subscribe if you’re new to the channel.