Most people consider these places as tax shelters. Using these places as a tax shelter is very simple to understand. If Sam, a C-level officer of a Fortune 500 company is being compensated partly by his multi-national company in his personal bank account in Luxembourg, how could the United States government tax him fully if the income they only know Sam is being compensated is the income that particular corporation pays him inside the United States? According to an ABC news documentary, the United States alone losses 100 billion dollars in uncollected taxes every year because of these certain tax shelters. They claim that the uncollected 100 billion could have been spent to build greener infrastructure or increase their own company's R&D spending.
Is it really counter-productive to allow these certain tax shelters to thrive? The only reason these certain tax shelters exist is because of their government's guarantee to banker-client secrecy. As a result, governments around the world has put more restrictions and regulations in the inflow and outflow of private funds sometimes resulting to the unintended manipulation of our free market forces.
I strongly believe that these certain tax shelters critics claim are states that put value to market forces second to none. As a result, concepts in market competition would therefore make decision-makers divert some if not all of their funds to these certain places for the pursuit of more productivity of their funds. It is quite logical to say that if states want to generate their desired revenues from taxes, they must, at least, improve efficiency in tax collection and not punish those who are considered to be the most productive factors of our world economy.
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