|The dismal "science"|
|More about economics|
“”There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations.
That's either the biggest building in the world or the biggest tax scam in the world, and we know which one it is.
|—Barack Obama, during the 2008 U.S. Presidential Election campaign|
“”The money gets to live the Caymans - the executives still live in New Jersey!
|—Bill Maher, Victory Begins at Home (2003)|
A tax haven is a place where wealthy individuals and companies can go, or at least route their finances through, in order to escape their obligation to pay taxes.
Typically they are countries which maintain a competitively low level of taxation, in many cases exempting some kinds of financial transaction from any form of tax whatsoever. Tax havens are also known for deliberately keeping minimal transparency, with laws protecting financial administration from outside investigation. This prevents foreign authorities from assessing their citizens' tax obligations when they are using financial services in a tax haven.
Tax havens thrive on complicated scams, such as trusts and companies which serve no other purpose than to transfer money and assets without tax. For example, the ownership of a property (such as a house or land within the United States) may be transferred to an offshore trust set up for the purposes on a tax haven, thus avoiding inheritance tax within the USA.
Tax havens have developed considerably during the twentieth century. Initially they were a place for rich individuals to move or retire to, away from the clutches of the taxman. However, with the rise of offshore banking, private finances have increasingly benefitted from tax havens without requiring residency. Tax havens have also attracted a huge scale of investment from corporations, particularly multinational companies. Corporations which require no specific physical location, such as insurance firms and internet-based companies, often make use of tax havens. Unsurprisingly, the profits of organized crime also regularly end up in tax havens, where crime bosses can take advantage of the financial opacity for money laundering purposes, as well as avoiding taxation.
Many tax havens are concentrated on the island nations of the Caribbean, including Antigua, Barbados, Bermuda, the Bahamas, and the Cayman Islands. Tax havens in Europe include Andorra, Jersey and the Channel Islands, Liechtenstein, Monaco, and Switzerland. Many of the Caribbean's tax havens, as well as the Channel Islands, are British Commonwealth nations or crown depencies. Tax havens play host to an estimated 8 trillion US dollars-worth of assets ($8,000 billion), costing the USA, UK and European nations billions in lost taxes every year.
Opposition to the continued existence of tax havens has been growing, especially following the financial crisis of 2008. Both Barack Obama and Gordon Brown stated their resolution to put an end to tax havens' privileges, and Obama began his term as President by initiating legislation to combat their financial secrecy.
 See also
- ↑ Vanessa Houlder, "Harbours of resentment", Financial Times, 1 December 2008.
- ↑ "It's hypocrisy to leave British tax havens open", editorial, The Observer, 8 March 2009.
- ↑ Nick Mathiason and Heather Stewart, "Obama backs crackdown on tax havens", The Observer, 9 November 2008.
- ↑ Nick Mathiason, "Obama bid to stamp out tax havens", The Guardian, 4 March 2009.