Holding Company (profit, pay, rich, companies)

[midlifeman]

What is the benefit of creating a holding company? Meaning one company that has several businesses under it that may or may not be related?

[samston]

Lower risk and a higher return.

Take Unilever or Proctor and Gamble. Both are conglomerate type companies, and should Ben and Jerry's take a fall in demand, there are other companies/products within the group to pick up the slack.

I think being a holding company is better in modern economic times, since the economic environment and general world environment is more complex now. It's better to spread risk and de-centralise, over stay in one product line/industry. Few big world companies do this, for that reason.

[killer2021]

lower taxes, less regulation. These holding companies are based in tax havens and NOT subject to the jurisdiction of US tax law. Tax avoidance is not a crime, tax evasion is, however. If my holding company is based in Liberia and the business/corporate tax is 0% and my company earns 100$ million profit. I am subject to paying zero taxes on those profits. However, if I take that 100$ million profit and pay myself 100$ million dividend then I am subject to standard US tax rates (as a US citizen). Ever heard that saying that the rich don't pay taxes? The reason that is so is because the rich keep their wealth in the form of businesses that are based in tax havens. Just keep that in mind when some genius tells you that we should raise taxes on the, "rich."

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