Real estate and import taxes are the two that could be considered 'direct' taxes. Paying 7.5% or 10% of the value of your home at sale time is DEFINITELY a direct tax, its just highly delayed. This tax is based on the idea that most valuable property in the caymans is not owned by locals or is owned by very wealthy people. But everyone pays it...
Corporate taxes are indirect, but if you arent living off your own personal wealth, you are paying for those taxes through the products you buy from those companies or the lower wages you receive from those companies if you work there.
Aside from all of that -- it is foolish to assume that this would work in other countries that are not very small, exotic, and dependent (at least in some part) upon tourism/foreigners. In some sense, you could say that the taxes are paid by foreigners more than locals. Thats all fine and good for Caymans, but again, that would never work in the US, Europe, etc where populations are large compared to the number of visitors/foreigners.
Find me a country with a population of 50 Million that does anything like this, and I'll move there. :)
1 - Imported by wealthy residents who live there because of the exotic locale. 2 - Imported by tourism. 3 - Imported by the banking industry.
This would never work in a country that isn't a tax shelter from other nations, or a country that has actual, tangible, real industrial production.
Why?
Of course you can create a near utopia without taxation for your own people if you are able to import fabulously rich residents by the boatload and taxing them instead. This is obviously not an option that is sustainable on a large scale , nor do most countries have the exotic climate to support it.
In short, you need to tax somebody. In the Caymans these happen to be rich foreigners on holiday (or in some sort of semi-permanent residence)... in other countries clearly the taxes have to come from somebody else.
“This would never work in a country that isn't a tax shelter from other nations,” but isn’t Manhattan N.Y. U.S. also a tax haven to foreigners, other then U.S. citizens? And doesn’t the Cayman Islands support competition among, within and between taxing districts of the world, for which they attract wealth? Maybe it’s the competition among governments that makes it work in Cayman, giving money owners a better deal then they get else where.
“Somebody”, yes… if direct then apportioned. Tax somebody with competition, perhaps maybe best.
This is not entirely true. There was an income tax that was put into place for a number of years around the civil war, but was later abolished. Im not certain on the exact years, though.
Either way, taxes still abounded back then, they just werent compulsory. But they were if you were alive, eating, and tried to move around society. In other words, if you lived in BFE and had a farm, you probably didnt pay anything -- but if you lived in the city, you almost had to when buying tea, other food items, paying for stamps, other imported items.
The debate about whether we should have income tax or not is somewhat moot outside of armed rebellion. Its here to stay. The point that is more important is that it should be uniform, easy to follow, and LOW. I should not pay 50% of my efforts to the government. 5%, ok, 10% maybe, but 50%? no. The amount is what makes the income tax so unbearable, not that it exists at all.
Brian
There were taxes prior to the income tax, they were just different taxes. A flat rate sales tax and no income tax would still be tax - it would just be easier to avoid.
By OECD standards, we are the largest tax haven in the world. The United States, for example, source: https://www.reason.com/news/show/34248.html
the power to avoid, adds to freedom, not suggest with 19,000 pages of tax code though....