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- Lets say that I run a company that is based inside of the United States. So this right over here is my company. Maybe I have some smokestacks of some kind. So that is my company, and it makes a million dollars in pre-tax profits. One million dollars, and this is before tax. So, pre-tax profits. And lets say that the country that Im in, and the way Ive drawn it, this is the United States, lets say at the time that I make those pre-tax profits the corporate tax rate is 35%, 35% tax rate. So, its pretty straightforward to think about how much taxes I would have to pay. I would pay 35% on this one million dollars, or essentially I would pay $350,000 in taxes. Three-hundred and fifty thousand dollars in taxes, and I would have 650,000 left in profit. So, 650,000 left in profit. Now what I want to think about, lets say my company wants to get a little bit more creative about how it might save on taxes. So what it does is, it realizes that theres an island not too far off the U.S. C
