Tex Haven

Many myths follow the tax haven such as lots of tax evasion, higher tax, bad policies, burden of tax towards the poor and away from the rich etc. Also, at present tax haven are considered the doorway to money laundering and international drug running (countries such as Singapore, Hong Kong, Switzerland, Luxembourg etc). Even European Commission, United Nations and Organization for Economic Co-operation and Development (OECD) argue that tax havens are bad for economic growth. But there is no evidence to prove this. The United States is the world's largest tax havens for foreigners and it facilitates the flow of capital to the American economy. Foreigners have more than $11 trillion invested in the U.S. economy, including more than $7 trillion invested in America's financial markets. Nearly $1.3 trillion is placed in the U.S. financial system by Caribbean institutions. This money helps finance America's economic growth.

Tax havens:

It is any jurisdiction that satisfies two criteria:

1. Attractive Tax laws for global investors and entrepreneurs

2. Protects fiscal sovereignty by not putting foreign tax law above domestic tax law

Tax havens are determined by factors such as jurisdiction imposes no or only nominal taxes, lack of transparency etc. It has a jurisdiction that may be attempting to attract investment and transactions that are purely tax driven. Tax havens promote fair tax competition between nations. Countries with the more constructive tax regimes attract prosperous people to move there. This then changes the balance of power away from the overbearing established powers that would seek to form a global cartel/monopoly of high-tax countries.

The Economic Case:

1. Encourage investment and brings capital:

Tax havens instead shift the resources in productive sectors. The economic growth has grown more than the 1970’s since the introduction of tax havens. Tax haven promotes tax competition. Tax competition forces greater fiscal responsibility...