Tax and tax havens Tax havens contribute to growth development in the small potential countries. More so, in small states, land is considered very expensive. The low density in population that the country can accommodate will attract the household with high income (Gordon, 2002, p.15-31). The high-income affected households, in most cases will enjoy low income taxes. The small-scale size is also favored by the formation of social capitals, as well as the reliance of tourism, which is a major promotion to the small size countries. Individuals and the businesses that are residing in a tax haven can use the advantage of evading paying of the taxes back at their original home countries. The conditions of tax haven are not limited to individuals and businesses residing or operating away from the country for it to gain benefits from the policies that guide taxing. The small open economies have lower tax rates on the corporate sector. These small size countries are also on the verge of gaining political stability in their environments. This is geared towards development of the small states in terms of adequate infrastructure (Sparwasser 2007, p.12-14). Tax haven can be the key to erosion of the tax-based policies of the other countries. This is because; the pressure that tax systems undergo is the same in both corporate investment companies as well as personal investment. The logic behind it being that when the jurisdiction is applied on the least income or in some cases no tax on the income of a business or personal investment, then the most of the residents found in a non-haven state may channel all their investments into a tax haven. This essay will discuss the different views that authors have on tax havens. The first part of the essay will give the views of the nature of tax havens as being beneficial to the small states. The reasons as to why they are good to these states will be explained as well as their importance in the developmental strategy of these countries or states. Example will be given to support each point. The second part will give the disadvantages to tax havens. This will be demonstrated by examples that are from real life situations. The third section will describe the nature of tax havens that benefit the small states. In this part factors that determine the beneficial impact on the small states will be explained in details Every person who is considered an American resident is required to pay taxes in U.S whether the income is earned in the U.S or not. A person who is a non-resident of the United State of America will use “Pass through or Disregarded” This means that if a person is not an American resident he can avoid some taxes by taking up tax benefits such of transfer pricing. In the case of U.K, non-residents have tax havens until seven years are over when they start remitting their taxes. People, who have lived in U.K for 17 years in a period of 20 years, do pay inheritance tax because they are deemed domicile in the United Kingdom. UK interested in the well-being of its citizens formulates policies necessary in enriching residents more than foreigners. Due to a tax burden caused by foreigners, government usually, raise the tax rates of local capital. In order to ensure good governance, UK has formulated programs through which citizens can are informed on different political issues. There are high levels of inconsistency in the fact that tax
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