Tax Havens: Myth Versus Reality

We are indebted to the Center for Freedom and Prosperity for the following excellent statement concerning offshore tax havens:

So-called tax havens are routinely vilified, largely because they are perceived as a threat by politicians, leftist organizations, and other advocates of bigger government and high tax rates. In almost all cases, however, attacks on these low-tax jurisdictions are either baseless or distorted.

Surprisingly, anti-tax haven demagogues generally are unable to even correctly identify characteristics that make a jurisdiction a "tax haven." Is it low taxes? Zero taxes? Financial privacy laws? Incorporation laws that do not require ownership information? The existence of bearer shares? And even the critics that use a more carefully tailored definition – i.e., a jurisdiction that exercises its sovereign right to not enforce the tax laws of another nation – often engage in discrimination when listing the world's tax havens.

The United States, for instance, is a tax haven. Foreigners can – and do – put money in the U.S. and earn interest and capital gains without any obligation to pay tax to the IRS and without being reported to their governments. Many states allow foreigners to set up corporations without disclosing ownership information. Some even allow bearer shares. These policies have helped attract trillions of dollars to the U.S. economy, yet critics of tax havens fail – perhaps deliberately – to note how any campaign against tax havens unambiguously can boomerang against America's self interest.

Critics also ignore how tax havens provide confidentiality to ethnic, religious, racial, sexual, and political minorities, a critical role since the majority of the world's population lives in nations have less than stellar attitudes toward human rights. Likewise, tax havens also are a refuge for people in nations suffering from crime, extortion, and corruption. Tax haven opponents routinely rely on shoddy numbers, ignore academic evidence, and engage in smear campaigns.

Public policy, however, should not be based in mistruths and stereotypes fostered in novels and movies. And public policy certainly should not be based on politicians in high-tax nations persecuting nations trying to prop up their inefficient welfare states by engaging in anti-globalization policies.

For eleven major tax haven myths go to:
LINK: http://www.freedomandprosperity.org/Papers/th-myths/th-myths.shtml