Final answer:
The question pertains to tax avoidance strategies involving the relocation of income and assets across different tax jurisdictions to minimize tax liabilities. While taxpayers may employ such strategies, including the use of technology, legal and practical complexities exist, particularly with international transactions and tax havens.
Step-by-step explanation:
The question addresses the concept of tax avoidance by relocating income and assets to jurisdictions with lower tax rates or different tax laws. State and local governments impose taxes to fund services such as road repair and education, and taxpayers are often able to deduct state taxes from their federal tax obligations. While shifting income and assets may offer some tax relief, companies also have the option to leverage technology to minimize their tax liabilities. Moreover, the existence of different tax jurisdictions, both domestically and internationally, means that financial flows are challenged by varying taxation rules. The complexity increases when international trade and capital movements are involved, as governments may find it nearly impossible to control or tax all forms of financial capital flows.
Despite these possibilities, there are practical difficulties and legal considerations when moving assets or utilizing tax havens like the Grand Caymans. National governments are the ones imposing taxes, and international financial flows come with their own set of complications. While a country like the United States has seen a decrease in tax audits, especially among high-income individuals, the interconnected nature of the global economy demands participation in international trade and capital movements, making strict control over financial transactions complicated.