Tax "Havens"

[JHB]

I brought this up in a GD thread:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2921744
but I thought this would be a better place to actually get knowledgeable answers:


Can anyone give me a legitimate purpose for offshore "tax havens"?

As far as I can tell they're just modern-day pirate's coves, places for thieves and swindlers to hide their loot while serving no useful purpose to anyone else.

I'm willing to admit I might be missing something, but I haven't read or heard it yet.

[papau]

1. define a "tax haven" - it just is hard to get words that don't include legitimate countries.

[JHB]

2. Let's start with the Cayman Islands and expand from there (n/t)

[flashl]

3. Maybe this DU post offers some insight?

Former Treasury secretary Summers argues for global cooperation in tax enforcement

Next year is sure to feature an explosive debate over tax issues, such as whether to lower the corporate rate or let the Bush tax cuts expire. But if former Treasury secretary Larry Summers had his way, he’d focus first on transfer pricing and tax havens.

...

Tax havens are at the top of his list, as they currently shelter about $3 trillion, Mr. Summers said. Further, transfer pricing rules need to be “substantially strengthened.” He estimated the gap between the amount of taxes owed and how much is paid at $400 billion a year and said that could be reducing significantly by focusing on tax havens and transfer pricing.

Mr. Summers said greater cooperation among industrialized countries to craft similar tax rules would help cut back on tax havens and corporate income being shipped overseas. He argued that corporate income is not a “zero-sum game”—if Europe or Asia wins, the United States does not necessarily have to lose—and that tax competition is costly for all countries in the long run.

[AngryAmish]

4. These tax havens are sovereign nations

They get to make their own rules but the international community does not have to deal with them.

The problem with outlawing them is freedom of movement. If someone wants to live in Ireland (tax haven for artists) or Monaco it is hard to tell people they can't go.