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 then, governments have however been racing to reform tax regimes and cut tax rates. Nowadays, top personal tax rates average only about 40%, while corporate rates have now decreased to about 27% on average. It is largely globalization that has triggered this change as opposed to ideology. Governments are reducing taxes as they fear investment and jobs will flee outside national borders.
Tax havens have contributed significantly to such positive developments by offering refuge to individuals wishing to avoid appropriately tax rates. Lawmakers have figured out that generating revenue by charging modest taxation rates is a better alternative to imposing high rates only to lose 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.
Such likely victims can get important protection by stashing their money in tax havens. Even the United Nations has admitted that many governments across the globe spy on their citizens for much of the twentieth century with the aim of getting political control.
The OECD is seeking to rejuvenate its campaign against what it terms as uncooperative tax havens, but these are the very countries that assist in driving a better tax policy. Fortunately, its proposals are facing an uphill task. They have gotten some blacklisted tax havens to sign commitments to weaken their tax laws. However, the haven will only do so if other countries agree to the same policy, which is quite unlikely.
Tax competition is directing tax policies in the right way, something that Puerto Rico tax haven is playing a significant role in this liberation process. One sure way of reducing evasion is lower rates and tax reforms. The reason why people evade taxes in the first place is because of the high rates, hence a reduction will do wonders.
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 then, governments have however been racing to reform tax regimes and cut tax rates. Nowadays, top personal tax rates average only about 40%, while corporate rates have now decreased to about 27% on average. It is largely globalization that has triggered this change as opposed to ideology. Governments are reducing taxes as they fear investment and jobs will flee outside national borders.
Tax havens have contributed significantly to such positive developments by offering refuge to individuals wishing to avoid appropriately tax rates. Lawmakers have figured out that generating revenue by charging modest taxation rates is a better alternative to imposing high rates only to lose 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.
Such likely victims can get important protection by stashing their money in tax havens. Even the United Nations has admitted that many governments across the globe spy on their citizens for much of the twentieth century with the aim of getting political control.
The OECD is seeking to rejuvenate its campaign against what it terms as uncooperative tax havens, but these are the very countries that assist in driving a better tax policy. Fortunately, its proposals are facing an uphill task. They have gotten some blacklisted tax havens to sign commitments to weaken their tax laws. However, the haven will only do so if other countries agree to the same policy, which is quite unlikely.
Tax competition is directing tax policies in the right way, something that Puerto Rico tax haven is playing a significant role in this liberation process. One sure way of reducing evasion is lower rates and tax reforms. The reason why people evade taxes in the first place is because of the high rates, hence a reduction will do wonders.
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