7 ms·

I wonder why there hasn't been an attempt at making a country where regulations are kept minimal and taxes nonexistent or only dependent on what you use. It wo

by relyio 9y ago

I wonder why there hasn't been an attempt at making a country where regulations are kept minimal and taxes nonexistent or only dependent on what you use. It would probably attract a ton of economic activity. Does it exist? edit: rephrase

YorickPeterse 9y ago
The Cayman Islands?
- caymanjim 9y ago
  This is largely how the Cayman Islands operate. There's no income or capital gains tax, but everything brought to the island for consumption is subject to 20%+ import duties. Non-citizen professionals working there must pay $10-25k annually for a work permit. It's a very expensive place to live, on par with some of the most expensive cities in the US, but there's no direct tax on wealth. If you're a US citizen, however, you have to pay taxes to the US (beyond roughly the first $100k, anyway).
eli 9y ago
Somalia maybe?
icu 9y ago
If you are American the answer is no... Americans are taxed by way of citizenship. The only way out is to give up your citizenship and that's not easy. Other countries have different rules that apply to their citizens and also to residents. Generally speaking I think it's far better too focus on making the money more than mitigating the tax. So while I believe there is no moral obligation to pay more tax than legally required, you would have benefited from the tax of previous generations so why should you have a free ride?
- therealmarv 9y ago
  If a US citizen lives somewhere else how is he supposed to pay taxes to the country he lives in? Only to the US usually? Double tax treaty? I bet many countries do not like that. Just asking out of curiosity.
  - rcxdude 9y ago
    Taxes paid to another country are (generally) deducted from the tax to pay to the US. There is also a rather high total income exclusion. In practice most US citizens living and earning money overseas do not pay significant tax to the US, but they must still file the paperwork (most expats who renounce their citizenship do so because of the expense/time to do so, as well as the difficulty of banking as a US citizen overseas due to the restrictions the US effectively enforces on foreign banks who have US citizens as customers).
  - URSpider94 9y ago
    Some countries have tax treaties. For those that don’t, you can deduct foreign tax paid from your US income taxes. In most cases, you won’t end up paying again in the US, if you already paid overseas, unless you have large amounts of income that are US-taxable and exempt in your country of residence.
- MadSudaca 9y ago
  > you would have benefited from the tax of previous generations so why should you have a free ride? Is there another choice?
Dangeranger 9y ago
How would this government raise the funding to protect this economic activity? Would they ask everyone to please be nice?
- therealmarv 9y ago
  There are some countries which are really rich (like UAE). And some countries only tax inside country income and not things from outside (there are many countries doing it that way). It's not a model for every country... countries which are doing that are usually not very big.
  - Dangeranger 9y ago
    Another commonality of these countries is that they have a valuable exploitable resource within their borders which allows for them to fund their government through the nationalization of that resource. Unless the libertarian utopia/dystopia referenced above were to nationalize the economy of it's residents (not likely) I don't see a way for that government to nurture productive commerce and protect that commerce at the same time.
repomies6999 9y ago
Numerous tax haven countries? There are like dozens.
tim333 9y ago
There have been a lot of attempts with varying success. Places like Monaco, the Bahamas and Dubai have close to zero tax but still regulations. Hong Kong was a successful example of low tax and light regulation. Probably the biggest way of avoiding tax and regulation these days is to be multinational. Then no one country can really control you for better or worse.
- tonfa 9y ago
  With most dual taxation treaty, and automatic sharing between countries (incl. almost all those you cited, starting this and next year), that is slowly going away.
  - tim333 9y ago
    On the other hand cheap flights and the internet make it easy to travel. You get the likes of Rupert Murdoch with bases in London, NY and Aus and the businesses held by various tax haven trusts and not much tax paid.
matt4077 9y ago
That's a sort of libertarian fever dream, yes. It fails to account for lots of things, among them: - The idea of unspecified "regulations" inflicting grave damage on the economy for no useful purpose is simply wrong. Yes, there may be regulations some people consider too broad, or intrusive. But it's a question of degree, and I assure you, you wouldn't want to life in a place without any of them. The best case scenario is that instead of a law that forbids the use of lead as colouring agents for potato chips, you'll get a less-effective, more expensive private certification scheme with the same rule. - Corporations only pay taxes on profits. As such, these taxes have no effect on the corporation's investments, research, or other spending. - Governments tend to be more effective in spending than private companies. Medicare % medicaid, for example, have something like 1% or 2% of administrative overhead, compared to roughly 20% of overhead and profits for private insurance. As further evidence of the stinginess of governments, compare the average desktop PC in government offices to those at your favourite company. - Such a country could reduce spending almost exclusively by picking and choosing the people to admit, leaving other countries to care for poor, old, or sick people.
grandalf 9y ago
The problem is that wealth redistribution policies have irresistible appeal, and no regulatory system that is freedom-oriented adequately addresses the aspect of luck that impacts one's lot in life. For instance, if the initial population of such a country all sat down together and agreed on what level of social support they would want if they happened to be born with below-average IQ, having some severe physical disability, being suddenly unable to work, having a special needs child whose care cost more than their own annual wages, etc., then the rules of the game could be set up in a sustainable way so that generation after generation there would not be the same sort of market for social entrepreneurship intended merely to achieve after-the-fact wealth redistribution, since a fair system would have been baked in from the start. I don't think this is so much a classic market failure as it is a failure of human brains to perform counter-factual reasoning. Also, values change over time. What is viewed as a fair system now might be viewed very differently in a 50 or 100 years, all else being equal.

by relyio 9y ago

YorickPeterse 9y ago

The Cayman Islands?

caymanjim 9y ago
This is largely how the Cayman Islands operate. There's no income or capital gains tax, but everything brought to the island for consumption is subject to 20%+ import duties. Non-citizen professionals working there must pay $10-25k annually for a work permit. It's a very expensive place to live, on par with some of the most expensive cities in the US, but there's no direct tax on wealth. If you're a US citizen, however, you have to pay taxes to the US (beyond roughly the first $100k, anyway).

eli 9y ago

Somalia maybe?

icu 9y ago

If you are American the answer is no... Americans are taxed by way of citizenship. The only way out is to give up your citizenship and that's not easy. Other countries have different rules that apply to their citizens and also to residents. Generally speaking I think it's far better too focus on making the money more than mitigating the tax. So while I believe there is no moral obligation to pay more tax than legally required, you would have benefited from the tax of previous generations so why should you have a free ride?

therealmarv 9y ago
If a US citizen lives somewhere else how is he supposed to pay taxes to the country he lives in? Only to the US usually? Double tax treaty? I bet many countries do not like that. Just asking out of curiosity.
- rcxdude 9y ago
  Taxes paid to another country are (generally) deducted from the tax to pay to the US. There is also a rather high total income exclusion. In practice most US citizens living and earning money overseas do not pay significant tax to the US, but they must still file the paperwork (most expats who renounce their citizenship do so because of the expense/time to do so, as well as the difficulty of banking as a US citizen overseas due to the restrictions the US effectively enforces on foreign banks who have US citizens as customers).
- URSpider94 9y ago
  Some countries have tax treaties. For those that don’t, you can deduct foreign tax paid from your US income taxes. In most cases, you won’t end up paying again in the US, if you already paid overseas, unless you have large amounts of income that are US-taxable and exempt in your country of residence.
MadSudaca 9y ago
> you would have benefited from the tax of previous generations so why should you have a free ride? Is there another choice?

Dangeranger 9y ago

How would this government raise the funding to protect this economic activity? Would they ask everyone to please be nice?

therealmarv 9y ago
There are some countries which are really rich (like UAE). And some countries only tax inside country income and not things from outside (there are many countries doing it that way). It's not a model for every country... countries which are doing that are usually not very big.
- Dangeranger 9y ago
  Another commonality of these countries is that they have a valuable exploitable resource within their borders which allows for them to fund their government through the nationalization of that resource. Unless the libertarian utopia/dystopia referenced above were to nationalize the economy of it's residents (not likely) I don't see a way for that government to nurture productive commerce and protect that commerce at the same time.

repomies6999 9y ago

Numerous tax haven countries? There are like dozens.

tim333 9y ago

There have been a lot of attempts with varying success. Places like Monaco, the Bahamas and Dubai have close to zero tax but still regulations. Hong Kong was a successful example of low tax and light regulation. Probably the biggest way of avoiding tax and regulation these days is to be multinational. Then no one country can really control you for better or worse.

tonfa 9y ago
With most dual taxation treaty, and automatic sharing between countries (incl. almost all those you cited, starting this and next year), that is slowly going away.
- tim333 9y ago
  On the other hand cheap flights and the internet make it easy to travel. You get the likes of Rupert Murdoch with bases in London, NY and Aus and the businesses held by various tax haven trusts and not much tax paid.

matt4077 9y ago

That's a sort of libertarian fever dream, yes. It fails to account for lots of things, among them: - The idea of unspecified "regulations" inflicting grave damage on the economy for no useful purpose is simply wrong. Yes, there may be regulations some people consider too broad, or intrusive. But it's a question of degree, and I assure you, you wouldn't want to life in a place without any of them. The best case scenario is that instead of a law that forbids the use of lead as colouring agents for potato chips, you'll get a less-effective, more expensive private certification scheme with the same rule. - Corporations only pay taxes on profits. As such, these taxes have no effect on the corporation's investments, research, or other spending. - Governments tend to be more effective in spending than private companies. Medicare % medicaid, for example, have something like 1% or 2% of administrative overhead, compared to roughly 20% of overhead and profits for private insurance. As further evidence of the stinginess of governments, compare the average desktop PC in government offices to those at your favourite company. - Such a country could reduce spending almost exclusively by picking and choosing the people to admit, leaving other countries to care for poor, old, or sick people.

grandalf 9y ago

The problem is that wealth redistribution policies have irresistible appeal, and no regulatory system that is freedom-oriented adequately addresses the aspect of luck that impacts one's lot in life. For instance, if the initial population of such a country all sat down together and agreed on what level of social support they would want if they happened to be born with below-average IQ, having some severe physical disability, being suddenly unable to work, having a special needs child whose care cost more than their own annual wages, etc., then the rules of the game could be set up in a sustainable way so that generation after generation there would not be the same sort of market for social entrepreneurship intended merely to achieve after-the-fact wealth redistribution, since a fair system would have been baked in from the start. I don't think this is so much a classic market failure as it is a failure of human brains to perform counter-factual reasoning. Also, values change over time. What is viewed as a fair system now might be viewed very differently in a 50 or 100 years, all else being equal.