TAX LOOPHOLES
These are the clever ways that the big MNCs use for their benefit to save enormous amounts of taxes. These big companies have gotten so good that they’re able to save absolutely 100% of the tax.
This has led the common public to ask do these companies are stealing money from the government and why is the government not taking any action against them. The answer is yes and no both because yes they are stealing money in a way that benefits all three other people as they invest that money back into the system which further flows through the hands of the common man. And as a matter of fact, the government would be doing the same but somewhat differently so they tend to not take very legal action against these loopholes. Generally, businesses tend to take advantage of these loopholes because finding these loopholes are a very challenging and tedious process to do for which the government can undertake these undertakings.
The government absolutely knows about these loopholes but they never try to close these because some parts of the government are also benefited in other countries from these kinds of loopholes. Cayman Islands and Maldives are amongst the top countries where these practices are implemented.
WAYS OF SAVING TAXES
- Big companies like Apple form their own organizations in other countries where big tax exemptions are allowed, like in Ireland. There they give their patents to their own firm and then borrow their own patents on a loan from them which makes them a borrower of equipment and hence Apple falls out of the category to pay taxes as they own nothing.
Here the company from which they are borrowing is their own company, this fact is known by the government but they tend to ignore it altogether and charge Apple with no taxes.
2.Big MNCs form shell companies in the Cayman Islands or the Maldives where shell companies are not taxed. For the record, they do something very little and in papers, they show millions of dollars of losses in those shell companies. And in their country of origin, they show huge losses and take that tax exemption because the government doesn’t charge you in taxes for losses in businesses.
These are the very simple tax loopholes that everybody knows but then also no action has been taken to overrule these practices. There are more severe and acute loopholes that these companies are using every day to save taxes.
3.Big educational institutes also try their hand in tax exemptions. These big institutes are not taxed if they are under construction. As a result, even if they are fully built they keep on constructing small things within the boundaries to show that they are under construction and pay nothing in taxes as a result. Even if a small construction is going on they show it on their papers which enables them to save massive amounts of taxes.
4. In the book, Rich Dad Poor Dad, Robert describes the best way to evade taxes is to form your own corporation and then anonymously invest your own money in it. He also describes that rich people use this tool for ages to save loads of taxes.
These are the practices that are making rich people even richer. The rich people know how to make money out of anything but the financially illiterate and poor people don’t think out of the box to make more money out of thin air which makes them go poorer day by day without them realizing it. So be financially aware of the things and ways through which you can make more money and save more taxes. If the rich are doing it why can’t we do it?
WHY GOVERNMENT WANTS YOU TO DO BUSINESS AND NOT JOBS?
Simply because if you are doing business then you are helping them in creating more jobs and making more people financially independent but if you are doing a job then you are a liability to the government whose needs are to be filled.
That’s why people doing jobs are taxed more often and in more percentage than people who are doing business.
On the contrary, the government doesn’t want everyone to do business because the number of jobs are more than business opportunities so they keep it low-key by never teaching money and teachings of life in schools. Even if you take commerce you are never taught how money works in the economy instead you are taught to be someone who can work for somebody else and make their time more worthwhile than yours.
In a normal day job you are paid and then taxed and whatever is left you can spend but in businesses they generate revenue then they spend and then whatever is left is taxed. Because if someone spends the revenue generated in business then it remains within the economy and the government exempts it from taxes.
The government wants the money to stay in the economy and not in your savings because the money remaining in the economy can be reused for other purposes by the government and the banks but money kept in savings cannot be touched unless the owner wants it to. Hence the economy and the government punishes those who keep savings in the form of inflation and higher tax rates.
WHY DO DIFFERENT TAX RATES EXIST?
These exist because some people are more brilliant and talented than others in terms of making money in government punishes them more if they make more money. It is only for those people who make more money from jobs and other undertakings because giants like Apple and Amazon don’t pay a single dollar in taxes.
Tax bracket is a concept that is centered around the middle-class people so that they never become rich and take the positions of those who make their dominant decisions in society. This clearly shows the smartness and intelligence of rich people and how they have been cruel to us.
In the early early days of taxation during the start of the industrial revolution, the concept of tax was introduced to punish the rich as they had a lot of possession but we all know the rich are more brilliant in terms of money management and acquisition. Through the passage of time, they introduced taxes for the middle class and the lower classes as well. Now taxes were aiming at those people who wanted it in the first place for their rich people. Clearly, history has shown as rich people have been the dominant force in society in terms of making decisions for everyone.
The legendary investor Warren Buffett pays less taxes than his secretary because he falls in the lower tax bracket than her. This is the abusrdity of economy.
