Tax Havens:

 see also:  Economic Development

Controversy:

Are tax havens are a negative force, worsening poverty and corruption, or a positive one, forcing government to stay competitive on tax policy and creating wealth.   Critics accuse such countries of worsening poverty and inequality by allowing the rich to avoid obligations to the societies where they built their wealth. Others argue that tax havens play a positive role in the global economy by forcing government stay competitive on tax policy.

Dan Mitchell writes: Tax competition is a liberalizing force. When politicians worry that jobs and investment have the freedom to cross borders, their reflexive desire to overtax and overspend is at least somewhat curtailed. Tax havens play a valuable role in this process, and this helps explain why income tax rates have dropped by more than 25 percentage points since 1980 and corporate rates have fallen by more than 20 points. These reforms have greatly strengthened the global economy, improving living standards across the board and helping to lift hundreds of millions of people out of poverty. Efforts by bureaucracies such as the OECD to create a tax cartel -- an "OPEC for politicians" -- should be rejected. Such policies would be a threat to the U.S. economy. Foreigners have more than $12 trillion invested in America in part because we also are a tax haven. Foreigners generally don't have to pay tax on interest and capital gains, and the IRS generally doesn't collect information on those payments, so there is no information to share with foreign tax collectors. Moreover, states such as Delaware have incorporation rules that are popular for foreigners seeking to protect themselves from confiscatory taxation in their home countries.

read the discussion here:  http://online.wsj.com/article/SB120593814650448571.html?mod=fox_australian

see article:  from wallstreetjournal.com