When some people think of a tax haven, what comes to mind is a picture of rich businessmen laughing at the tax loopholes that their accountants have figured out. This popular image together with the fact that some individuals have private bank accounts with millions of dollars somewhere in Puerto Rico or Monaco makes it easy to be suspicious of tax havens. Some may wonder why the wealthy get tax reprieves while ordinary people pay their fair share. However, such conventional wisdom can never be more wrong, as everyone is a beneficially of a Puerto Rico tax haven in one way or another.
For one, thanks to tax havens, the taxes of people living in developed countries are probably much less than they were thirty years ago. In 1980, the average tax rate for personal income was more than 67%, while corporate taxes was on average almost 50%. To compound this image, nations slapped extra tax rates on capital regularly including inheritance taxes, capital gain taxes, wealth taxes and dividend taxes. Such policies stifled economic growth by discouraging taxes and investments, resulting in significant economic hardships.
Since that time, governments have raced to make reforms in tax regimes and cut out tax rates. These days, personal income tax rates are about 40% on average, with their corporate counter parts having reduced to an average of 27%. This change has largely been as a result of globalization rather than ideology. Governments are reducing tax rates since they fear citizens will start looking for employment and investment opportunities outside the borders.
Tax havens have made a major contribution to these positive developments, through the provision of a safe refuge for people who want to dodge confiscatory taxes. Lawmakers have decided that generating revenue through modest tax rates is better than imposing high rates and then risking losing out.
Tax havens do have a moral role to play. They play a significant part in protecting people subjected to sexual, political, religious or racial persecution. So many people in the world live in regimes and nations that have little respect to human rights, and rich people are mainly targeted by dictatorial governments.
For such potential victims, depositing money in a tax haven offers vital protection. Even the UN, in a 1998 report that attacked tax havens, was compelled to admit that governments across the world spied on their people with the aim of maintaining political control for much of the 20th century. Political freedom can be boosted by the ability to hide from government purely personal information.
The OECD is attempting to boost its campaign against what it refers to as uncooperative tax havens. The truth is that these are the same haven assisting in getting better tax policies. The proposals are doomed to fail since tax havens are refusing to weaken their tax laws. They say it can only happen if all nations agree to it, something that is very unlikely.
Tax competition is taking tax policy in the correct direction, and a Puerto Rico tax haven play a major role in this process of liberation. Tax reforms and lower rates are a sure way of combating evasion.
For one, thanks to tax havens, the taxes of people living in developed countries are probably much less than they were thirty years ago. In 1980, the average tax rate for personal income was more than 67%, while corporate taxes was on average almost 50%. To compound this image, nations slapped extra tax rates on capital regularly including inheritance taxes, capital gain taxes, wealth taxes and dividend taxes. Such policies stifled economic growth by discouraging taxes and investments, resulting in significant economic hardships.
Since that time, governments have raced to make reforms in tax regimes and cut out tax rates. These days, personal income tax rates are about 40% on average, with their corporate counter parts having reduced to an average of 27%. This change has largely been as a result of globalization rather than ideology. Governments are reducing tax rates since they fear citizens will start looking for employment and investment opportunities outside the borders.
Tax havens have made a major contribution to these positive developments, through the provision of a safe refuge for people who want to dodge confiscatory taxes. Lawmakers have decided that generating revenue through modest tax rates is better than imposing high rates and then risking losing out.
Tax havens do have a moral role to play. They play a significant part in protecting people subjected to sexual, political, religious or racial persecution. So many people in the world live in regimes and nations that have little respect to human rights, and rich people are mainly targeted by dictatorial governments.
For such potential victims, depositing money in a tax haven offers vital protection. Even the UN, in a 1998 report that attacked tax havens, was compelled to admit that governments across the world spied on their people with the aim of maintaining political control for much of the 20th century. Political freedom can be boosted by the ability to hide from government purely personal information.
The OECD is attempting to boost its campaign against what it refers to as uncooperative tax havens. The truth is that these are the same haven assisting in getting better tax policies. The proposals are doomed to fail since tax havens are refusing to weaken their tax laws. They say it can only happen if all nations agree to it, something that is very unlikely.
Tax competition is taking tax policy in the correct direction, and a Puerto Rico tax haven play a major role in this process of liberation. Tax reforms and lower rates are a sure way of combating evasion.
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