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Comment by seanmccann | Hacker News Reader

You can incorporate in Delaware to allow shareholders from any US state avoid double taxation. You incorporate (mostly funds) in zero tax countries to allow worldwide investors avoid double taxation. A shareholder of an "offshore" corporation often still pays the taxes in their home country.

There's certainly a lot of abuse, but there are valid reasons to own offshore stock.

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"You can incorporate in Delaware to allow shareholders from any US state avoid double taxation" - could you please expand on it? Are you talking about corporate tax + dividends tax, or about something else when saying "double taxation"?

I'm not the person you are asking, but I think it means a US shareholder in a US company being taxed both by the state the company is incorporated in, and the state the shareholder resides in. There are a lot of state taxes that Delaware doesn't charge at all, or can be avoided. It's almost like Delaware is a discount seller of corporate residency. Charge a low price and make it up on volume. Smart strategy by the states/countries with the political will to do it.

If you live in a state where you are taxed on your investment earnings, you might feel "double-taxed" if those earnings were already taxed at the corporate level.

ah.. that sounds like tripple-taxing then. 1) Federal Corporate Income Tax, 2) Incorporation state income tax, 3) State of shareholder residency taxing income (and then shareholder spending money to buy things and pay sales tax.. - 4?)

Funds with international investors often incorporate in a place like the Caymans. If the fund was incorporated in the US, a UK investor "deal with" US+UK tax, even if they don't visit or do business in the US.

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