Big Income Tax Loophole
How’d you like to be able to transfer your taxable income to a state like Nevada or Delaware, rename it “passive income,” and pay no income tax to any state? That’s exactly what thousands of companies do with the profits they make in 19 states that have still failed to plug this loophole. Companies create “Passive Investment Companies” in Delaware or Nevada. These “PICs” then charge royalties for the use of company logos, trademarks, and other intellectual property. These royalties reduce or eliminate the taxable profits the companies would have had in the 19 states, and Delaware and Nevada call such money “passive income” and do not tax it. The solution: Combined Reporting. See more on this issue here.
See the Big Giveaway Index, our compilation of the most egregious scams and risky subsidies.