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Comment by mattsfrey | Hacker News Reader

US citizens still owe taxes on any income over a certain threshold as per:

https://en.wikipedia.org/wiki/Foreign_earned_income_exclusio...

There is no more tax advantage to the law abiding citizen in this scheme versus just registering an llc in wyoming/nevada and living abroad.

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There are a number of advantages to Cayman Islands incorporations, such as (under some complicated circumstances) delaying recognizing income until repatriation (allowing for the money that would have gone to taxes to compound for some time), or avoiding Unrelated Business Income Tax for an IRA or non-profit entity that invests in a business that takes on debt (the latter being an extremely common reason above-board entities use Cayman Islands blocker corporations).

http://www.taxpolicycenter.org/taxvox/why-do-us-investment-f...

Tax deferral doesn't help you if you pay at the same rate at repatriation. Multiplication commutes, paying either before or after compounding doesn't matter. It could help for, like, maintaining ACA subsidy eligibility.

Yes, it does:

Imagine 39% tax, where you compound at 10%.

If you pay tax once per year, that becomes 6.1% after tax.

1.061^5 - 1= 0.34455

Now imagine you compound for 5 years at 10%, then repatriate and pay 39% on your profits:

(1.1^5-1)*.61 = 0.37241

You have 10% more if you defer taxes.

law abiding *US citizen, but yes.

Which is why I started my comment with "US citizens.." but also, if you're not a US citizen (for most countries anyway) you can register a corporation in a dozen other tax havens and avoid any taxation without those ludicrous fees given you are living abroad.

If you can pull off the tax-nomad thing. There are fewer places in which you can basically "buy" work permits and live income tax-free semi-permanently. (The Caymans will "roll you over" / send you home for a year after 8-9 years if you don't apply for Permanent Residence (more expensive).)

Malta has economic residency program with fixed 15% tax rate (minimum 15K).

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