The Cayman islands used to be the islands that time forgot where you could go for a weekend or more “hideaway”.

Now the Cayman Islands are known for the islands where the rich can hide away their money and avoid paying taxes.

A very different ‘hideaway’. And this article appearing on the Amherst Patch website even tells you how to do it……  if it was only THAT easy.

A Cayman Islands Investment Primer

Posted on August 5, 2012 at 11:38 am

Are you worried about the runaway financial inequity between the rich and the other 99% in the US and its potential effects on long term social stability? Are you disgusted with the facts that the richest country on earth cannot seem to fix its crumbling physical infrastructure, provide reasonably priced health insurance to all its citizens and a business-competitive information infrastructure?

If so, I recommend that you follow the money and look at the tax avoidance systems that rich individuals and corporations based in the US use to avoid paying their fair share of taxes. In 2011, Reuters published a chart showing the actual revenues by category collected by the US Treasury from the 1950’s to the present time. Until 1998, there was a pretty consistent parity between individual and corporate tax revenues. Then there began a precipitous decline in the % of total US revenues from corporate taxes that has continued until the present. This shifts the burden of taxation from corporations to individual citizens and robs funds from worthy goals such as paying down the national debt and infrastructure improvements. And now rich individuals are using the same tax dodges as big corporations putting further pressure on the middle class to make up the difference.

As a people, I believe that we need to educate ourselves on the tax avoidance techniques that rich people and corporations use, expose the scofflaws and refuse to listen to, buy products from, or vote for them and government supporters of retaining tax loopholes. A recent study of tax havens around the world found that they hold between 21 and 32 trillion dollars, which is more than the combined GNP of the US and Japan economies.

The Cayman Islands are a popular tax free haven for many rich people and large corporations based in the US. Banks in the Caymans not only help clients to avoid taxes but hide assets, financial transactions, and trading in international markets.

Three steps are required to completely hide assets and profits in the Caymans.

First, set up an International Business Corporation (IBC) that performs no business functions but hides the identity of the investor. “Shelf” IBC’s that already exist can be bought if you have enough money and want to establish a reputation of stability and longevity in the Islands.

Second, set up an offshore trust that owns the IBC. This removes the connection between the identity of the IBC founder and any bank accounts set up by the IBC. The trust can also own and hide US-based assets that cannot, or are undesirable, to move offshore (such as real estate, art collections, etc.).

Third, set up investment bank and brokerage accounts in the name of the IBC. Cayman banks allow holding of multiple international currencies, precious metals as a hedge against inflation and brokerage access to international markets anywhere on the planet, all hidden from outside investigation.

As if this isn’t bad enough, The New York Times has exposed the illegal money laundering of profits from US operations of some of our largest corporations. The funds are transferred to phony offices in Europe for laundering without paying any taxes and then transferred to investment banks in Bermuda and the Caymans.

Republicans would have you believe that all the problems we are facing are due to excessive spending by the government and that people that work hard and accumulate a fortune, independent of the way they accomplished this, should be allowed to do anything they please with the assets they have accumulated. While more conservative spending will have to be part of the solution to dig out of the economic hole that we are in, we will not be able to break the back of our economic woes without stopping the cheating happening on the revenue side of the equation.

For more on this story go to:

http://amherst.patch.com/blog_posts/a-cayman-islands-investment-primer