Tax haven

{{Economics}}
{{cquote|There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations.<br>That's either the biggest building in the world or the biggest tax scam in the world, and we know which one it is.|||[[Barack Obama]] during the [[2008 U.S. Presidential Election]] campaign<ref>[http://www.oecd.org/site/devaeo10/44276169.pdf Tax Havens and Development], Independent Norwegian Commission on Capital Flight from Developing Countries</ref>}}

{{cquote|The ''money'' gets to live the Caymans - the executives still live in [[New Jersey]]!|||[[Bill Maher]], ''Victory Begins at Home'' (2003)}}

A '''tax haven''' is a place where wealthy individuals and companies can go, or at least route their finances through, in order to escape their obligation to pay [[tax]]es.

Typically they are countries which maintain a competitively low level of taxation, in many cases exempting some kinds of financial transaction from any form of tax whatsoever.  Tax havens are also known for deliberately keeping minimal transparency, with [[law]]s protecting financial administration from outside investigation.  This prevents foreign authorities from assessing their citizens' tax obligations when they are using financial services in a tax haven.

Tax havens thrive on complicated scams, such as trusts and companies which serve no other purpose than to transfer money and assets without tax.  For example, the ownership of a property (such as a house or land within the [[United States]]) may be transferred to an offshore trust set up for the purposes on a tax haven,<ref>Or, sometimes, for the purpose of protecting the asset against seizures and lawsuits. The courts have grown wise to such schemes, though, and will now throw the defendant in jail for contempt of court if an asset is awarded to the plaintiff and the defendant doesn't release it from its offshore trust.</ref> thus avoiding [[estate tax|inheritance tax]] within the USA.

Tax havens have developed considerably during the 20th century. Initially they were a place for rich individuals to move or retire to, away from the clutches of the taxman.  However, with the rise of offshore banking, private finances have increasingly benefitted from tax havens without requiring residency.  Tax havens have also attracted a huge scale of investment from [[corporation]]s, particularly multinational companies.  Corporations which require no specific physical location, such as insurance firms and internet-based companies, often make use of tax havens.  Unsurprisingly, the profits of [[organized crime]] also regularly end up in tax havens, where crime bosses can take advantage of the financial opacity for money laundering purposes.

Many tax havens are tiny nations with small economies, such as the [[Caribbean]] island nations of Antigua & Barbuda, Barbados, and the Bahamas, and the [[Europe|European]] microstates of Andorra, [[Liechtenstein]], and Monaco. There are also several sub-national jurisdictions, such as the [[United States|US]] [[state]]s of [[Delaware]], [[Nevada]], and [[South Dakota]] as well as territory of the [[U.S. Virgin Islands]], and the [[British]] territories of [[Jersey]] and the Cayman Islands, which can be considered ''endogenous'' tax havens, because they offer significant tax incentives to corporate entities while allowing said entities to technically remain incorporated within their "high-tax" nation of origin. Tax havens play host to an estimated 8 trillion [[USD]]-worth of assets ($8,000 billion), costing the USA, UK and EU nations billions in lost taxes every year and placing a disproportionate tax burden on ordinary citizens and small businesses which do not evade tax.

Opposition to the continued existence of tax havens has been growing, especially following the [[Banking crisis|financial crisis of 2008]]. Both [[Barack Obama]] and [[Gordon Brown]] stated their resolution to put an end to tax havens' privileges and Obama began his first term as [[POTUS|President]] by initiating legislation to combat their financial secrecy.<ref>Nick Mathiason, [http://www.guardian.co.uk/business/2009/mar/04/obama-tax-haven-crackdown Obama bid to stamp out tax havens], ''The Guardian'', 4 March 2009.</ref> It has also been one of the OECD's primary goals since the late '90s.

In the UK, multinational companies such as Amazon, Google, Vodafone and Starbucks have come under fire during the 2010s for their avoidance of UK taxes.<ref>BBC News Magazine, [http://www.bbc.co.uk/news/magazine-20560359 "Google, Amazon, Starbucks: The rise of 'tax shaming'"], 21 May 2013.</ref> In 2015, the [[Panama Papers]], a leaked database of records from a Panamanian law firm heavily involved in the tax haven industry, revealed the vast global extent of tax-dodging by corporations, wealthy families and individuals (including numerous politicians, such as [[David Cameron]], then the UK's prime minister).<ref>''The Observer'', [https://www.theguardian.com/world/2016/oct/16/taxes-panama-papers-trump-tax-havens "As Donald Trump made clear, smart businesses know only idiots pay tax"], 16 October 2016.</ref>

For all its efforts to make sure foreign financial institutions report the information of all U.S. account-holders, the U.S. government itself refuses to hold U.S. financial institutions to the same standards vis-a-vis other countries. As a consequence, the United States is one of the world's biggest tax havens, courtesy of its take down of the competition.<ref>Ana Swanson in ''The Washington Post'', [https://www.washingtonpost.com/news/wonk/wp/2016/04/05/how-the-u-s-became-one-of-the-worlds-biggest-tax-havens/ How the U.S. became one of the world’s biggest tax havens], 5 April 2016 (accessed 2016/11/1).</ref>

==See also==
*[[Free market]]
*[[Micronation]]
*[[Going Galt]]
*[[Tax protester]]
*[[Bitcoin]]

==References==
{{reflist}}

[[Category:Countries]]
[[Category:Crime]]
[[Category:Economics]]
[[Category:Financial fraud]]
[[Category:Scams]]
[[Category:Tax]]
[[Category:Tax havens|*]]

Categories: Countries, Crime, Economics, Financial fraud, Scams, Tax, Tax havens