Can someone ELI5, what entities or convoluted mechanisms or businesses do very rich people create / have access to that they can minimize taxes, which the rest of us simply cannot take advantage of here in regular life?
For example take Paris Hilton. When she had her DUI a few years ago her 500k car got repo'd. Wah? She stopped making payments on it. Payments?! Because she probably had it going through some business expense structure and was probably literally writing off the interest and payments. More than likely the original money was borrowed against an existing capital asset. If the sale price of the car did not make up the difference they had to come up with whatever cash was left over. Like most repos. But in this case it was a fairly flashy car that held its value decently well. So they probably took a small loss. But there was never any real risk to owning it.
Think of getting a HELEOC but running everything through that type of borrowing structure. But since you 'know a guy' you get the super awesome low interest rates. Which are business expenses. That flashy show of hers was a way to write a bunch of stuff off. Everything is an expense and a way to write it off your taxes. In some cases it does not even affect your taxes if you bury it in another company that is doing something similar that you control 100% of and just happens to be in a lower tax bracket. But gave you a sweetheart deal of leasing a yacht for a small amount per year for being such a good customer!
Except if you don't actually relocate there, in which case it's fraud.