ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos

Finance: What is a tax haven? 1 Views


Share It!


Description:

A tax haven is a nation that offers special tax incentives for corporations doing business there.

Language:
English Language

Transcript

00:00

Finance allah shmoop What is a tax haven Well it's

00:07

this kindly loving wonderful place just past the gates of

00:10

st peter you know maybe that's attacks heaven If you

00:13

tilt your telescope at just the right angle you'll see

00:16

the cayman islands of the bahamas You might see somalia

00:20

although it always seems to be storming therein And lately

00:23

you'll see ireland Yeah another tax haven Well how on

00:26

earth are all these countries linked Well they all offer

00:30

special tax incentives for corporations doing profitable business there such

00:35

that those corporations more or less pay little tax if

00:39

any Why was this even a thing Well in america

00:42

at least before trump became president there was a severe

00:45

hit against corporations who had divisions outside of the united

00:49

states selling printers or search links or purple leather handbags

00:53

for nine hundred ninety nine dollars each such that those

00:56

corporations were taxed once by the country in which they

01:00

did business Think france that was ah high tax rate

01:03

And then if those companies wanted to bring their cash

01:05

back to america to be held in an american bank

01:09

well then those companies were taxed again turning a dollar

01:13

Of profit into something like an thirty or forty cents

01:16

since it made no sense for companies to lose so

01:18

much hard earned profits so quickly to tax dollars Well

01:22

a mini industry in tax havens grew up all around

01:26

those unfair government dealings Well some of the schemes behind

01:29

these processes included something called a dutch sandwich and no

01:34

not the one with the raw hearing No in this

01:38

one the product is deemed as having been shipped by

01:41

an irish company but then booked or accounted for through

01:45

a shell or quays I fake company or holding company

01:49

in the netherlands sometimes remaining profits or then shipped to

01:52

the caymans or bermuda otherwise known as the bermuda black

01:55

hole Which leads the way for us to make a

01:57

joke here But we won't I say we do ever

02:00

strength There are three basic types of tax havens in

02:03

a dutch sandwich Primary tax havens Yeah those are the

02:07

ones with the shell corpse Then he have semi tax

02:10

havens where a country will produce goods for sale primarily

02:13

outside of their boundaries and have flexible regulations to encourage

02:17

you No job growth for themselves and third kind is

02:20

a conduit tax haven where income from sales mainly sales

02:24

made elsewhere is collected and then distributed back inside the

02:27

country Well over time the legal structure of tax havens

02:30

has shifted But in the new post obama era which

02:33

actively lowered corporate tax rates and defended american companies rights

02:38

to bring american cash back home to america While the

02:40

need for tax havens feels like it is slowly fading 00:02:43.803 --> [endTime] away But there's still more popular than tax heaven

Up Next

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Related Videos

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...