Below is a great example of what is called as tax avoidance which Wikipedia.org defines as
legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law.
For the politically endowed US banks, tax avoidance means establishing numerous subsidiaries around the world.
From Bloomberg,
The biggest U.S. banks created more than 10,000 subsidiaries in the past 22 years as they expanded, using legal structures to pay lower taxes and escape tighter regulation, according to a Federal Reserve study.
JPMorgan Chase & Co. (JPM), the largest U.S. lender, has the most units at 3,391, followed by Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. (BAC) with more than 2,000 each, the study by the Federal Reserve Bank of New York shows. Citigroup Inc. (C), the third-largest lender, has 1,645.
Critics including Thomas Hoenig, a Federal Deposit Insurance Corp. board member, say the biggest firms are too complicated to manage. The 2010 Dodd-Frank Act asked the FDIC and Fed to make sure the largest banks, if they get into trouble, can be wound down without collapsing the rest of the financial system. U.S. Senator Sherrod Brown has
proposed legislation to force their breakup.
“When regulators are left to curtail the risk of trillion- dollar megabanks with hundreds of affiliates, we know that too big to fail is also too big to manage” said Brown, an Ohio Democrat and member of the Senate Banking Committee.
Well this is just the banking system, I would conjecture that many significantly sized companies, as well as, the wealthy, do the same. The rich according to CNBC has an estimated $21 to $32 trillion stashed overseas. Of course this claim has been made by political parasites eyeing to seize their property.
The lesson here is that people will respond to changes in tax regimes. So any puritanical statist idea of imposing taxes to generate revenue without considering people's responses are likely to fail.
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