Monday, July 12, 2010

Money Matters

Pop quiz! What do Hong Kong, Luxembourg, Belgium, Delaware and Bermuda all have in common? (No, it’s not a proliferation of quality truck stops but nice try). Along with Ireland, London, Switzerland and the Cayman Islands they’re the world’s best tax havens according to a recent article in Forbes Magazine. Says the report, two benchmarks were used to determine the top ten destinations: The capability to move money in serious quantities and a measure of each locale’s opacity (or how secret it is, meaning if regulation is intentionally created for the primary benefit of those who live there, then it’s probably a good place to hide cash). Of course not all of that money is illicit. But, says writer Richard Murphy, “if you’re going to hide illicit cash, where better to do it? Where it stands out from the crowd, or where it can be lost like a needle in the proverbial haystack? Big numbers help the owner of dubious cash lose theirs in the crowd, and the places named above are big.” No secret there. Companies have long set up shop in Bermuda for the tax breaks alone. It’s the reason why the island is so, shall we say, well taken care of. Big firms get tax breaks and ultimately a lot of that money gets reinvested back into the community. Says Murphy about Bermuda: It’s “the favorite location for U.S. corporate inversions, or companies that move their headquarters to a tax haven while retaining their material operations in higher-tax America, and any offshore insurance company.” Yep, it’s all true. But does your tax haven have pink sand beaches? Take that Delaware.

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