The corporate tax rate on income in the Bahamas is 0% for internal source income and external source income, i.e. money earned outside of the Bahamas. The corporate tax rate on income in the United States at the federal level is 15% for the first $50,000 per year in income, and graduates up to 35%, regardless of where the money is earned, inside or outside of the United States. There are numerous tax incentives and loopholes to reduce the tax rate for a US corporation, but certainly the Bahamas have a distinct advantage on the tax scale.

Can you as an American take advantage of this tax free country to incorporate your business and avoid having your business income taxed, for example if you were setting up the next Google and you wanted to operate your internet company outside the United States? MAYBE, but most likely no.

Why? Because of the Controlled Foreign Corporation rules of the internal revenue code, which require Foreign Corporate Income to be taxed as if it were earned by the US shareholder directly in instances where 50.1% of the corporation is owned by Americans. In other words, if the next Larry Page and Sergey Brin are a couple of Stanford students, one American, one Korean, and they incorporate their business in the Bahamas each owning 50% of the company, they can operate the company tax free; however, the offices will actually need to be in the Bahamas or another tax free jurisdiction outside the US.

What if they want to take the money out of the corporation to use it? The Korean will be in luck, because only the US and Libya tax their citizens on income earned or derived outside the country, the American, might be able to take some money out of the company tax free, but it will take some effort.

US citizens can "earn" some income outside the United States and avoid taxation if they actually reside outside of the US for most of the year, and earn the money from a foreign source. Of course, there are some questions regarding "earned" income and potentially controlled foreign corporations that might make this more questionable because to avoid taxation, the company would need to be a passive investment, as I understand it, but I'm still familiarizing myself with this area of law, but something about this area strikes me as very anti-thetical to America's historical spirit. I mean how can a country formed in tax protest tax money earned outside the country?

The question at this point of course is, which country has a better tax policy for economic development, clearly the Bahamas have a dramatic advantage, but this advantage has become more important, as we can all see in terms of the future because of the internet, especially when new FREE TRADE ZONES are considered. If you set up an online retailer in the right places, you could very much operate at a tax advantaged basis versus US companies.

The problem that the US needs to address with its tax policy at this time, is the need to pay for certain expenses going forward, and a definate need to ELIMINATE the income tax to remain competitve going forward versus many jurisidictions.

At this point, I think a modification of the so called Fair Tax plan is likely the way to go. I would suggest that a national retail sales tax, coupled with a continuing reporting requirement for income, coupled with a separate national consumption tax that adds some progressivity to the Fair Tax plan, while further encouraging savings and investment would be the way to go, coupled with a complete elimination of the corporate income tax.

Realistically, the current US tax code is putting the country at a significant disadvantage going forward in terms of economic development as compare with numerous tax havens around the world.

Incentives end up all wrong. Raising revenue and spurring economic growth take a backseat to punishing "greed", which ends up being defined as making any profit on anything truly useful.

Simplicity and efficiency would be my main goal, past raising the most revenue for the least invasiveness. Reporting to the government just for their benefit doesn't seem like the height of democracy to me. How did the US last so long with no income tax at all?

http://www.fairtax.org/site/PageServer

The FairTax Plan is a nonpartisan national grassroots campaign to replace the federal income tax system with a progressive national retail sales tax. It provides a "prebate" to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue replacement and, through companion legislation, repeal of the 16th Amendment.

It surely didn't last long as the kind of U.S. you like, the kind that 'remakes' areas of the world via, among other methods, military means.

You, yourself, have to make up your mind what kind of state you want the U.S. to have. 'Muscular, pro-active foreign-policy' and 'no income tax' is a deal-breaker.



The preceding is weapons-grade balloneyum.

Sort of like the Greeks before they became irrelevant. Like this post and it's relevance to tax policy.

So how would one go about qualifying as 'poverty level'. I could maybe/sort of sign on to something like this if one forgot the poverty level and just exempted some goods and services.... ie food, medicine, (and to my best knowledge medicine already carries no sales tax.) Or maybe even go another way and tax only certain non-essential goods; like jewelry which was taxed at a 20% luxury tax at one time, or electronics....

I don't disagree with the idea.... but it would seem the idea of this endeavor would be to free up entrepreneurs from taxation in order to generate more American based business. I might also agree to that to some degree. I want whatever works and obviously the wages demanded by certain labor groups helped drive our jobs to China. (I also sign onto the philosophy that anything at all is better than nothing at all.) However, like a balloon, when one squeezes in one spot something has to pop out somewhere else. So where would you propose the 'pop-out' occur? Who would pay the taxes currently being paid by business?

Two more ideas I would toss for consideration. Since it appears that something needs to be done to make the US a more entrepreneural place for capital, wouldn't it be in the US's best interest to have a system where items up for budget consideration undergoes severe scrutiny? Tim Buck Two may applaud their people in congress for bringing in a pork project. But I hope they remember that if they're in the boat (as in the boat of the USA) and the darn thing goes down, I hope they know how to swim.

The other thing is the practice of businesses paying employee medical costs. This has been an ongoing gripe by me on this board. Until every American has to pay even a small amount of their 'medical obligations' we're going to have a run-a-way health care cost. Imho, we need to juggle the way health care is paid by Americans in general so that every American takes responsibility for thier own to some (more or less) degree.

Two unrelated things.

I am not yet sure what the purpose of this topic is?

However, if one has ever been to Nassau, the main island is an absolute dump....literally.

What that has to do with 'taxing policies', I have no clue. I can state that Paradise Island
is the tourist area and quite attactive and doesn't resemble at all the main island of Nassau
which looks worst than any 'slum area' of any big US city that I've noticed. JMTC.

Setting up a tax haven doesn't necessarily help the people, then again neither does taxing corporations out of existence to supposedly fund porgrams for the people. It may well be the best approach is somewhere in the middle. It sure would be nice to have a simpler tax system that raised the same amount of money without making April 15th a day of sheer terror for so many.

The point of the thread for me, is that unless we acknowledge and accept the fact that the invention of the internet so radically changed the way business can be done as to make it possible to do business in a tax free way, the United States is going to suffer dramatically in the coming years from the same kind of job flight that has been occurring already, only much worse.

If I can set up an Amazon.com in a tax free trade zone, via a corporation that is in a jurisidiction that doesn't tax income that is a member of that same tax free trade zone, why wouldn't I set up a serious competitor to Amazon in that tax free country? Fed Ex and UPS will handle the shipping, and provide similar volume discounts I'm sure.

At the end of the day, if my book is coming from a CAFTA country with no income tax, andy I pay 2 dollars less for it, hey, why buy at Amazon for the same service? What is worse, what if they owners of the company are Chinese, Indian, Japanese, Saudi, British, French, German, Russian, and not American. The transfer of wealth and the balance of trade gets worse. Or what if the company subcontracts out the shipping service to a subsidiary company that operates in such a country, and avoids paying taxes, or sets it up in a very poor, i.e. extremely low wage area of the US. How do they avoid taxes, no profits. Can't tax non-existent income. If the subsidiary breaks even, or "looses" money every year how can you tax their income when they have none? The parent makes money, but pays its expenses through a company designed to lose money.

Realistically, at this point our tax structure is creating a major hinderance for job creation, that we can do away with through the swoop of a few pens. That is the point.

As for the country's spending needs, do away with 3/4 of the defense budget or more, do away with a large percentage of discretionary spending, raise the Social Security and Medicare tax if you want and give us UHC, replace the income tax with a cross between the fair tax and the "consumption tax" discussed in "The Radical Center," sell most of the government owned lands here in the Western US and pay off the national debt and the problems for financing the government would be resolved.

You're saying much of what I've said for a long time regarding taxation, debt and government land. On the spending side we'd have to hammer some kind of compromise out.

Never, never, ever, ever sell the land.

they sell out the people

When the government owns it, the people are locked out. They pay for the upkeep and the interest on the debt, yet Washington decides if they can even set foot on it.

Wow!! You almost...almost...sound like one of them whaky libertarian guys!

His libertarian nationalized healthcare scheme is really whaky.

a thousand middlemen is your preference

I guess you missed that doubled "almost" part.


Socialized medical services will only change the party from whom those thousand middlemen get their paychecks.

You just hate competition, don't you? Do you work for the government, the one true monopoly?

H M O

I don't recall people waving guns in other peoples' faces to get them to join an HMO.

I don't follow you. At all.

Please clarify.

Slidell, Louisiana, 6.15 pm.

Homesick?

http://andrewsullivan.theatlantic.com/the_daily_dish/

How so? The U.S. 'survived' for quite a while without an income tax but it wasn't the type of U.S. you appear to want, given your views about how we should act in the world scene.

The worst of all possible worlds, by the way, is a combination of a v.a.t AND income tax (plus, all sorts of additional taxes, including various transaction-specific taxes and sundry asset-taxes).



I wish I had a memory of Slidell, Lousiana. Sadly, I don't.

I am back in L.A., and the next-door neighbor is vacuuming his yard. Quite literally. He has to be the weirdest dude . . .

I have no memories of Rapid City S.D., my birthplace, either.

What about the fornicator who's vacuuming his yard, with one of them combo vacuum/blower garden uber-contraptions. I swear, he has it on for at least 2 hours at a time. Is that a common thing, vacuuming your yard? (this is a bottom floor, condo yard. His, as per his telling, is the largest 'yard' in the whole complex).

If you have an immaculate lawn where no dirt peeks out from between the sod then .... no, it's not normal even then. lol

Dude's confused.

Yards need a good blow job.

Theres hardy anybody or anything that could not benefit from a good BJ.

I sure hope he isn't an environmentalist, though it probably beats using one of those stupid leaf blowers.



True, who doesn't?