EXPERT VIEW: Attacks On Wealth And The Offshore Jurisdictions

Henry Fea, Charles Russell, Private Client Partner, 17 September 2012


A changed industry

The money laundering and compliance rules have created a new industry and changed the business of offshore jurisdictions, as the costs of implementing these procedures mean it is not effective for those with relatively modest means to set up complex structures or use offshore bank accounts. The implementation of these procedures is perhaps now more rigorous in Cayman than in Delaware, to use the famous example.  The wealthy do not necessarily pay more tax but the squeezed middle have been encouraged to be more compliant.

The current “anti-rich, anti-tax haven” attitude is unlikely to result in fewer attempts to mitigate tax or to an increased tax take from the wealthiest 1 per cent of individuals, as there is little hard data available. The attacks on wealth and the current feeling towards the wealthy stem from the establishment rather than the millions of wealthy individuals directly affected. These individuals have yet to counter the attacks with credible arguments about their contribution to society.

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