Tax lessons from Tech

In October 2010, Bloomberg Businessweek reported that Google had saved $3.1 billion in taxes (legally), by employing such strategies as the "Double Irish" and the "Dutch Sandwich." [Source]

More recently, the New York Times explained how Apple is able to sidestep millions in state taxes -- it operates a small office in Nevada, where the corporate tax rate is zero, to report its profits. The rate in California, where Apple has its headquarters, is 8.84 percent. [Source]

Understanding that different states tax different things ... differently ... it started me thinking about how people in the Army could take similar advantage of taxation differences.

First, you can establish residency in one of the nine no-income-tax states: Washington, Nevada, Wyoming, South Dakota, Alaska, Florida, Tennessee, New Hampshire, and Texas. (Of those, Texas, Washington, Florida, and Alaska have a significant Army base.)
The problem with Texas, though, is that property taxes are relatively high -- at 1.82% of the home's value, we tie with Wisconsin for the highest percentage in the country. Plus, the sales tax is high -- 8.25 percent. Thumbs down -- it's good to be from Texas, but not really to live here, especially since Amazon.com is going to start charging sales tax on Texas residents starting July 1. [Source]

So what can we do?

I wonder if Amazon would charge sales tax on barracks residents who live on post. I hope not, because what I would do is start having Amazon ship to my work address. I'm not beyond trying to skimp on sales tax.

In the long term, I'm debating whether to turn my Texas property into a rental versus selling it and investing more into my next residence. If my next duty station is in Virginia, D.C., Maryland or *Hawaii*, that'd be great -- the property taxes are far lower as a percentage of home value.

So thank you, Google and Apple, for the inspiration. Tax evasion may be illegal, yes, but tax avoidance only requires a bit of creativity.