Luxembourg Says Delaware and Wyoming are Tax Havens
Brazil has been claiming that Delaware and Wyoming are tax havens -- because they have low costs and minimal disclosure requirements for business entities. The New York Times reports that Luxembourg's prime minister has now joined in this claim. He has called for both Delaware and Wyoming to be put on the tax black list of the Organization for Economic Cooperation and Development!
These kinds of allegations are likely the result of recent U.S. efforts to increase tax revenue from U.S. citizens who live, work or simply hold assets outside the United States. Some foreign jurisdictions resent the U.S. callng them "tax havens" when certain states in the United States seem to have "tax haven" characteristics.
The U.S. is unusual in that it taxes its citizens on income no matter where it is earned. Tax treaties may reduce the burden, but the general rule is that a United States citizen must pay tax on income earned anywhere in the world. And the U.S. is increasing its efforts to collect taxes on assets held abroad.
We could certainly debate whether Delaware or Wyoming (or any other U.S. jurisdiction) is a "tax haven." But it is true that disclosure requirements in many states for corporations and other business entities are less than they would be in many other countries. For example, a limited liability company can be formed in Delaware, Ohio and many other states without publicly disclosing the names of any of the owners or managers. This is not the case in many other countries. If nothing else, this is a good reminder to first consider asset protection strategies that are closer to home before considering offshore options.
One of the best known international tax havens -- the Cayman Islands -- is being forced to consider something that would have been unthinkable only a couple years ago: raising taxes. This may be yet another blow to Americans who hold assets in offshore accounts. As reported in a recent 