Money

World’s Best Tax Haven is in America; Unavailable to Americans

| by NCPA

Tax competition is an issue that arouses passion on both sides of
the debate. Libertarians and other free-market advocates welcome tax
competition as a way of restraining the greed of politicians. Governments have lowered tax rates in recent decades, for instance,
because politicians are afraid that the geese that lay the golden eggs
can fly across the border.

But collectivists despise tax competition
-- for exactly the same reason. They want investors, entrepreneurs and
companies to passively serve as free vending machines, dispensing
never-ending piles of money for politicians. So when a left-wing group
puts together a ranking of the world's "top secrecy jurisdictions" in
hopes of undermining tax competition, proponents of individual freedom
can use that list as a guide to world's most investor-friendly nations,
says the Cato Institute.

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The good news is that an American
state, Delaware, is number one on the list. And since being a tax
haven is a magnet for investment, this is good news for U.S.
competitiveness. The bad news is that American taxpayers are not
allowed to benefit from many of Delaware's "tax haven" policies, says
Cato.

Here's what a left-wing columnist in the United Kingdom wrote about the issue:

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  • One
    of the smallest states in the United States, it offers the best
    protection for anyone who does not want to disclose their identity as a
    beneficial owner of a company.
  • That is one very good reason
    why the East Coast state hosts 50 percent of the United States' quoted
    firms and 650,000 companies -- almost equivalent to one company per
    Delaware resident.

Also:

  • Delaware offers high
    levels of banking secrecy and does not make details of trusts, company
    accounts and beneficial ownership a matter of public record.
  • Delaware
    also allows companies to re-domicile within its borders with minimal
    disclosure, and allows the existence of privacy-enhancing "protected
    cell" or "segregated portfolio" companies, among many other stratagems
    useful for protecting the identity of those who do business there.

Source:
Daniel J. Mitchell, "The World's Best Tax Haven: In America, but
Unavailable to Americans," Cato Institute, November 2, 2009.