Brief description of tax havens
Tax havens are one part of the global economic system that divides the society into two camps. One group represents the users of tax havens (e.g. international companies, rich individuals, leaders of third-world countries, and even developed countries officials) and the supporters of tax havens. The other group represents people with the opposite opinion who would prefer keeping the money of international companies inside their home countries by strong regulation.
The tax havens provide a comfortable way to avoid paying taxes for entities that have enough resources to virtually move their headquarters to a foreign country with a more suitable tax system.
Are tax havens really bad?
I do believe that the entities that use offshore tax havens to avoid paying high taxes still pay much more than the average population, even if they use tax havens. If they avoid paying income tax, they still participate on e.g. VAT/sales tax from the expensive goods they buy, real estate tax, consumption tax. Large companies also create job positions and pay a lot on e.g. social security (depending on the system).
Big international companies are responsible to their shareholders and if there is a legal way to optimize their taxes and thus maximize the benefits for their shareholders, they have to use it.
Is it possible to regulate tax havens?
Although many of the tax havens can are located in small third-world countries, it is the right of every country to create its own tax and banking system.
The rest of the countries may try to implement new measures. But I am sure that most offshore tax havens are always one step ahead. Besides, there is very often a connection between local politicians and offshore companies.
The best way to regulate offshore tax havens is to create better tax conditions in your own country.
There would be no reason to move your capital outside of your country if your country has a transparent, fair, and simple tax system.
The connection between social justice and tax havens
The governmental system of many countries is corrupted and when you pay taxes, you (in most cases) pour a valuable liquid into a bottomless jar without seeing any effect. Strong and strict tax systems maintained by corrupted bureaucrats are just another way of an inefficient redistribution. If there is a possibility to avoid paying taxes, you can keep more resources and use them to help the people around you. You decide what happens to your money and who receives it. And you can see the effect immediately.
This problem is visible in transformed economies (countries that have switched from a centrally planned economy to a free market economy) – where the connection between politicians and businesses leads to wasting the resources that are coming from taxpayers. For example, the price of one kilometer of highway is almost twice higher in the Czech Republic than in Germany. When you see this as a taxpayer, you have no reason to contribute to such a non-transparent system.
Conclusion: Tax havens as a useful part of the economy
In general, tax havens are not evil. It is the strict and incomprehensive tax system that forces the business entities to optimize their liability towards their governments.
