When we refer to Tax Havens around the world, we mean all those countries around the world that offer an impenetrable secret wealth haven that is not taxed. It is commonplace for such tax havens to be countries that are not distinguished by strong economies or industries but base their prosperity solely on what is called a banking industry-tax haven.
by Thanos S. Chonthrogiannis
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The U.S. as the world’s main tax haven
The Tax Justice Network’s 2020 report, (www.taxjustice.net) with the title «Financial Secrecy Index (FSI): who are the world’s most offenders? The Tax Justice Network podcast special, February 2020» in which is referred that important steps have been taken to combat tax evasion by throwing the walls of any banking secrecy and privacy of all kinds of bank deposits, it shows another picture of conclusions.
More specifically, this report also always mentions the ranking of countries around the world based on the Financial Secrecy Index (FSI) which counts in units the degree of secrecy (banking privacy) of financial centers in the world and the impact this secrecy (privacy) has on global financial flows, that the U.S. despite its global strength at all levels is the second in the world tax haven.
Source: Data from Tax Justice Network (www.taxjustice.net)
The result of this secrecy and banking privacy regime is to end up in the U.S. banking system funds that are tax-free and unknown activities.
This type of U.S. tax haven is offered both to private companies and organizations that can be illegal, enabling them to avoid taxation, and to evade their funds that can be from illegal activities.
According to the above recent report by the Tax Justice Network, this situation involving the USA, which accounts for 21.37% of the global offshore financial services market, is getting worse in terms of developing any kind of privacy, banking privacy and tax avoidance mechanism for foreigners at both American federation level and individual U.S. states level.
It is also pointed out that many U.S. privacy mechanisms in terms of banking and tax secrecy have been drafted since the 1970s and not recently.
The reasons that make the U.S. the world’s main tax haven
The 1970s were important for the USA because then the U.S. doctrine for the development of a series of regional wars in Asia began to be implemented in practice, which would aim to weaken (economic, political, military, etc.) of the communism and especially the USSR allowing for the U.S. to win the Cold War.
In addition to developing regional wars, the necessary funds should be found to finance U.S. intelligence operations both in Europe (Greece, Portugal, Italy, etc.) and in central and Latin America (e.g. Chile, Nicaragua, Panama) equivalently in order to prevent the fall of friendly-Western governments of certain countries which would then pass on communist indirect control.
Such regional wars in Asia were the Vietnam War in the 1970s, the Soviet-Afghan War (1979-1989) where Taliban’s financing in this war against the USSR in the 1980s was financing by USA, the First Gulf War (1990-1991), the Iraq War in the 2000s (2003-2006) and the US War in Afghanistan (2001-present).
All these wars to be financed seamlessly had to have a seamless flow of funding and capital for consumption. The funds required to be financed were of enormous size and of course it was impossible to find in their entirety from the official US federal budget.
The longitudinal financing of all these wars mentioned above and US secret intelligence operations respectively in Europe and Latin America have created huge deficits in the US federal budget and in the current balance of their transactions respectively. Something everyone sees today.
The solution to finding these additional funds needed to finance these wars was given by the creation of a tax haven regime in the US with strong privacy and banking secrecy mechanisms for the purpose of accumulation in the US funds from all over the world that came from opaque and often illegal activities.
At the same time, however, in addition to secrecy and privacy at the federal level, similar mechanisms are distinguished within the US, namely at the level of individual American states, where certain states such as Delaware and Nevada are distinguished and offer privacy and banking secrecy mechanisms to obscure shell companies aimed at overcoming opacity in these US states in order to attract opaque wealth to them that will finance their prosperity at the expense of other American states.
The consequences of tax havens in other countries
The US authorities have so far shown no interest in the fact that the US banking system attracts illegal capital inflows and facilitates tax evasion in foreign countries. All services and organizations’ that promote transparency globally have the US at their target.
In addition, US authorities refuse to inform the authorities of other member countries of the world community of any type of suspicious transaction, although they oblige other countries to obtain information on such transactions from other countries.
Foreigners who evade or break the law in their countries choose the US to transfer their funds there for many reasons, of which the most powerful US banking secrecy offered.
The problem, however, is that the secrecy and banking privacy offered by US mechanisms harm the citizens of other countries whose corrupt economic and political elites use these offered US mechanisms to flee wealth acquired unfairly or illegally in their countries, thereby depriving the taxation of this wealth that would in turn be used to finance the creation of valuable infrastructures in health, education, etc. in their countries.
