States Respond To International Tax Haven Accusations
April 9, 2009
In a recent blog post we reported on the OECD’s release of its list of international tax havens. On March 31 Jean-Claude Juncker, Prime Minister of Luxembourg, a country which was placed on the OECD’s “grey list” of nations that have committed to international standards but not yet sufficiently implemented them, responded by asserting that Delaware, Nevada, and Wyoming should also be included on the blacklist of non-cooperative tax havens.
As Tax Analysts reports (subscription required), the three states have responded in quite different ways. Joseph Rogalsky, communications director for Delaware Gov. Jack Markell, says that the accusations are based on misconceptions about his state. He said businesses want to incorporate there because of its modern and flexible corporate statutes and efficient business services. In addition, while Delaware has a somewhat high corporate income tax rate of 8.7%, it is attractive for other reasons like ease of registering a corporation, strong anti-takeover laws, and having the US’s only judiciary dedicated to handle corporate legal issues.
Wyoming has responded by admitting their shady past but painting a picture of a better future:
In the first few days after taking office in 2007, [Wyoming Secretary of State Max] Maxfield heard from Forbes magazine, the FBI, and a congressional committee asking about problems such as shell corporations. That year, he said, four people registered more than 1,400 companies. He decided that changing the situation needed to be his top priority.
But “that’s about where we were, not where we are now,” Maxfield said.
His office worked with lawmakers during 2007 and got legislation (SF 26) passed in 2008 that took effect in January. Those laws “require a face of the company in Wyoming. There must be a registered agent in Wyoming,” he said, not just a post office box or an address.
The reaction from Nevada wins the prize for most indifferent and entertaining:
In Nevada, Daniel Burns, communications director for Gov. Jim Gibbons (R), was apparently unconcerned about the tax haven label.
“We have a legislative session in process, and we have more important things to deal with than the comments of somebody in Luxembourg,” Burns said.
Wyoming and Nevada have no corporate income tax, which makes them obviously attractive destinations for business.