Whenever some people hear of a tax haven, what springs to their mind is a group of wealthy businessmen enjoying the tax loopholes that have been figured out by their accountants. This stereotypical image, coupled with the fact that certain people have offshore bank accounts somewhere in Monaco or Puerto Rico with millions of dollars, makes tax havens suspicious. Some may question why the rich get tax rebates while the middle class and the poor do not. However, such an opinion can be wrong as each person benefits from a Puerto Rico tax haven.
For one, people who live in developed countries pay lesser taxes than they did a few decades ago, thanks to a tax haven. In the early 1980s, average tax rates for personal incomes exceeded 67%, with the average figures for corporate taxes nearing 50%. Nations routinely imposed extra taxes on capital in order to compound such images, inclusive of capital gain, inheritance, dividend and wealth taxes. Such policies not only discouraged taxes and investment, but also stagnated economic growth and triggered economic difficulties.
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.
There might even be a moral case in favor of tax havens. They play a crucial role in the protection of individuals subjected to ethnic, religious, racial, political or sexual persecution. A majority of the worlds population lives in countries and regimes having inadequate protection of human rights, and individuals with assets are often targeted by oppressive governments.
For such victims of oppression, depositing their assets with tax havens offers important protection. Even the United Nations wrote a report back in 1998 that attacked tax havens, but in it admitted governments all over the world for most of the 20th century spied on its citizens with the aim of accessing political control. One way of attaining political freedom involves hiding personal information from governments through tax havens.
The OECD is trying to invigorate its campaign against what it calls uncooperative tax havens. But these are the havens that are helping to develop a better tax policy. Its proposals are fortunately facing an uphill climb. It has blacklisted a number of tax havens, trying to get them to weaken their tax laws. The havens will however only do that if other nations also agree, which is unlikely.
Competition of taxes is leading tax policy in the right direction, something that a Puerto Rico tax haven makes a vital contribution to. Tax evasion can only be eliminated through reforms and lesser rates, as high rates are what leads to it in the first place.
For one, people who live in developed countries pay lesser taxes than they did a few decades ago, thanks to a tax haven. In the early 1980s, average tax rates for personal incomes exceeded 67%, with the average figures for corporate taxes nearing 50%. Nations routinely imposed extra taxes on capital in order to compound such images, inclusive of capital gain, inheritance, dividend and wealth taxes. Such policies not only discouraged taxes and investment, but also stagnated economic growth and triggered economic difficulties.
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.
There might even be a moral case in favor of tax havens. They play a crucial role in the protection of individuals subjected to ethnic, religious, racial, political or sexual persecution. A majority of the worlds population lives in countries and regimes having inadequate protection of human rights, and individuals with assets are often targeted by oppressive governments.
For such victims of oppression, depositing their assets with tax havens offers important protection. Even the United Nations wrote a report back in 1998 that attacked tax havens, but in it admitted governments all over the world for most of the 20th century spied on its citizens with the aim of accessing political control. One way of attaining political freedom involves hiding personal information from governments through tax havens.
The OECD is trying to invigorate its campaign against what it calls uncooperative tax havens. But these are the havens that are helping to develop a better tax policy. Its proposals are fortunately facing an uphill climb. It has blacklisted a number of tax havens, trying to get them to weaken their tax laws. The havens will however only do that if other nations also agree, which is unlikely.
Competition of taxes is leading tax policy in the right direction, something that a Puerto Rico tax haven makes a vital contribution to. Tax evasion can only be eliminated through reforms and lesser rates, as high rates are what leads to it in the first place.
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