rich people put their money in offshore accounts in foreign countries to avoid taxes. it's surprising that rich people consider their money safe there: it seems a foreign government could easily expropriate the money, and the rich people would have no recourse: they were wanting to keep their money offshore quietly, so they aren't going to make a fuss. then, it's free money for the foreign government to benefit their own citizens.
how did these offshore institutions establish credibility?
the U.S., suffering from loss of tax revenue because of offshore accounts, could support foreign governments in doing such expropriation, inducing rich people to save their money instead within U.S. borders, where it can be audited and taxed. such a change in foreign policy could be done by executive order, no Congressional approval needed. and it would probably be politically popular not to be helping foreign governments help rich people hide their money, which is probably what's currently happening behind the scenes: the U.S. probably threatens foreign policy retaliation if a country expropriates money belonging to Americans, even if that money was hidden and illegally stored there.
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