Financial Secrecy Index - USA tops the ranking
Interestingly, we are not alone in our assessment. Earlier this year Spears Wealth Management Survey (in an article devoted to providing high net worth individuals with a "guide to the best away to minimise personal tax bills") reviewed a number of prominent financial centres. Here is what Spears had to say about the USA:
Admittedly, the Unites States isn’t the first country to spring to mind when you talk of unblemished financial reputations - Enron, WorldCom, sub-prime mortgages - but nor does it seem like an obvious place for a tax haven, even with its light regulation of business. In reality, however, it is one of the best places in the world for deep pockets to escape the long fingers of the government.
The very simplicity of the scheme makes it almost incredible. Several American states - most notably Delaware, but also Wyoming - have a zero per cent rate of tax. If you set up a limited liability company or partnership (LLP/LLC) with at least two other partners who are not American residents, you can pay no tax on any foreign income. In addition, privacy laws in Delaware are second to none.
This lack of tax is because, according to Simon Evans, managing director of Nean Wealth Advisors, ‘The LLP is a fiscally transparent entity - it pays no tax in its own right - and the non-resident partners have no US source income.’ You can move all your income from around the world into America and not have to pay a cent in tax.
Even if the business or individual is not doing anything illegal, the presumed standing of an American-incorporated company immediately increases the respectability of the enterprise. Delaware companies are cheap to set up, efficient to run and without suspicious baggage.
‘It’s not well-known at all,’ says Simon Evans. While the American government is avoiding its own budget deficit and stamping on smaller tax havens with claims that they funnel money to terrorists, its own back yard is becoming a world centre for tax avoidance.
Read the entire article and you will see that we are not alone in thinking that the problem of financial secrecy is not restricted to small islands in the sun and a cluster of tiny prinicipalities in the European Alps.