Tax Havens Case Study

The biggest problem the U.S. government facing is that it does not know how much money taxpayers own in the Tax Havens. But, no country in this world can force other countries to change their regulations and laws, so the U.S. cannot ask another countries to change their laws to satisfy the U.S.. The effective way to limit the harmful effects is to ask other countries to share the information with the U.S. In May 2009; OECD removed Andorra, Liechtenstein and Monaco from the list of Uncooperative Tax Havens when these jurisdictions agreed to follow the standards of OECD, which include exchanging information. Tax Justice (2005) estimated the whole world might suffer 255 billion revenue cost of tax avoidance made by the individual. To understand how bad Tax Havens used by an individual in the U.S., people have to know the revenue cost of Tax Havens that caused by the individual. Gravelle listed two variables that should be used to estimate the revenue …show more content…
firm paid is 35 percent. In fact, the corporate income tax in U.S. is approximately 40 percent, which includes 35 percent of federal corporate income tax rate and about 5 percent of state and local income tax rate, which depends on which state the corporation conducts business. According to Tax Foundation, the top three countries where has the highest marginal corporate tax rate among 173 countries are the United Arab Emirates, Chad and United States. And U.S also has the highest corporate tax rate in OECD. The average corporate tax rate in the world is 22.9 percent (Pomerleau). Even though there is no agreed definition of Tax Havens now, people normally view low tax rate countries as Tax Havens. Many people believe that because U.S. has such high corporate income tax rate, that is why U.S. companies transfer their companies or assets to Tax Havens. However, is the 35 percent of corporate tax rate the real reason that force U.S. corporation moving to Tax