The BBC has a an article up demonstrating how this works:
Suppose you're American. You set up a company in Bermuda and sell it your intellectual property. It then sets up a subsidiary in Ireland.
Now, set up another company in Ireland: it bills your European operations for amounts resembling their profits. Now, start a company in the Netherlands.
Have your second Irish company send money to your Dutch company, which immediately sends it back to your first Irish company. You know, the one headquartered in Bermuda.
Are you bored and confused yet? If so, that's part of the point.
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With TrumpCare in ruins, Republicans now turn to the one thing they love to do more than anything else on their agenda: cutting taxes on rich people.
We know the GOPs message and they'll all unite behind it: taxes are killing jobs (despite low unemployment), the tax code is too complex (for damn near everyone, software sorts it out rather easily), and the usual pablum about how it will help the economy (nope). Yadda.
Democrats, however, could turn attention to tax evasion. As in, how about going after rich folks and corporations that use complex arrangements of shell companies to hide money overseas? Look at this, for example:
WASHINGTON – The U.S. Treasury Department plans to alter part of the Obama administration's high-profile attempt to stem cross-border corporate tax avoidance. The move, announced Friday, is part of the Trump administration's effort to reduce the government's burden on businesses and taxpayers.
...
Another rule on Treasury's target list made it harder for U.S. companies to transfer certain assets to foreign corporations, where they can defer U.S. taxation until they bring income home. Before those rules took effect, companies had more ability to make transfers of intellectual property while making them partially tax-free by attributing some of the value to foreign goodwill.
These were rules put in place by President Obama to crackdown on tax evasion by American corporations and wealthy individuals. There was good reason to do it too:
According to new estimates issued Thursday by the Internal Revenue Service, tax evasion is a pretty lucrative business, costing the federal government on average $458 billion per year between 2008 through 2010. That’s a slight increase from the previous estimate, issued in 2006, of $450 billion. The feds call that dollar figure the “tax gap” and say the rise is the result of better measurement rather than Americans engaging in more tax evasion.
Ultimately, the tax collectors at the I.R.S. think they will recover about $52 billion of that lost revenue, resulting in a net tax gap of $406 billion annually.
$450 Billion! That's a lot of moolah. Stricter laws are needed here. Democrats should make a crackdown on overseas tax evasion a non-negotiable requirement for any kind of bipartisan deal on taxes.
Plenty of wealthy Americans pay little tax thanks to these conplex arrangements setup overseas that have no other purpose other than avoiding taxation. That's money that the Treasury should be going after, not ignoring.
Of course Trump will oppose this. He's one of the people that does it. So its kind of a two-fer for Dems. Unites opposition to Trump and is good public policy.