Borrowing 40 cents of every dollar

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So what? Its their money. They can invest it where they want to. Generally money is invested where it will yield the largest return to the investor.

ruveyn

Which is actually a damn good argument in favor for countries that desire investment to stop tripping investors up.

That would make it very good for a country, if it stayed in the country.

Which is fine, provided that they are taxed at a reasonable level before they move their capital offshore; and provided that they do not evade taxation on the returns on those offshore investments.

If I invest money I earned in a different country, in a different country, then why should I pay taxes to a country which had nothing to do with those investments? It's a bit like paying someone a salary for not working for you.

There is also an argument that if the tax was at a reasonable level, capital wouldn't be moved off-shore. Once people begin to realize that "high tax rates" = "Less ROI" IE it makes the NPV of an investment lower*, they tend to understand why people elect to invest in countries with better tax rates.

*Note, when you do an NPV calculation its more or less Cost to undertake investment + R/(Cost of capital)^n If you then have to deal with 20% or higher taxes on the investment, in comparison to your competitors, then you cannot compete.

Taxation, in itself, is (in isolation) detrimental to an economy due to dead weight losses. Unless we assume a price elasticity of zero...

The tricky part, though, is finding the sweet spot on the Laffer curve...

Has it even been proven that tax havens hurt economies at all? (honestly, I do not know, but that is why I ask...)

As far as I know, its one of those things people will argue on regardless on what studies say about it. There was a paper on it by a guy named Desai (http://www.people.hbs.edu/mdesai/econlettersfinal.pdf) that I read a while ago, and the economist have published extensively on it.

But to my knowledge there hasn't been a truly decisive study on it.

http://www.economist.com/node/21532264

Because the law of the country where you reside requires you to pay tax on your global income. Indeed, US citizens carry tax obligations with them even if they reside entirely outside the United States.

Can I point out that all this finger pointing back and forth does nothing to solve the problem? Who cares who created what debt? Both political parties are essentially the same. They serve the same people. Bush sucked, and Obama totally sucks. It doesn't matter who caused what debt, and figuring out who caused more doesn't solve a damn thing. It's not like we can use that as a basis for which party we should vote for this time around.

NEITHER PARTY CARES ABOUT YOU OR I.

Actually, U.S tax law doesn't tax corporations on foreign income until its "repatriated" to the United States, therefore if so long as your foreign earnings go directly to a shell corporation or a holding company organized as some form of LLC (limited liability company) located in lets say the Cayman Islands, where you own 100% of the equity, you don't have to pay taxes on it.

The equity would technically count as net worth, however as far as I know the U.S doesn't have a tax on net worth, only on income and capital gains (it's not counted as capital gains until you either pay out dividends or sell equity).

You could also organize multiple holding companies, in a hierarchy structure, which if complex enough and with corporate headquarters all around the world would be near impossible to effectively go through for the government during a tax audit. You would also be free to invest the money in the country you earned it without paying taxes on it.

I spoke of individuals offshoring their assets. Corporations are fine, because ultimately their shareholders should face taxation based on the payment of dividends or the realization of capital gains from within the United States.

But a US resident is subject to deeming provisions within US tax law that specifically make this type of practice illegal. Now I don't dispute that it can be done--and is done. But that doesn't make it legal.