Cayman is well known in international financial circles as a top-notch offshore tax-haven. Most of the world's hedge funds are domiciled here, and most of the world's major international trading companies have subsidiaries or affiliates here. There is no local tax on their Cayman-generated profits.
More to the point for expats reading this Forum, there is no tax on wages or salaries. None. Zip, nought, nada. There are deductions for compulsory private pension-fund contributions (5% of salaries up to $60,000) and for compulsory private medical insurance, but that's it. Employers are required to match the 5% pension contributions; the funds are independently managed and accounted for. Each expat's accumulated investment (plus any profits) is paid to him when he leaves the Islands.
Our government gets a third of its spending-money from Import Duty on all goods brought into Cayman. This Duty is reflected in the high retail price of everything. The tax-haven clients pay most of the rest, with some help from our tourists. As for what government spends all its revenue on - don't get me started! A huge, huge amount is wasted. I have posted some severely critical comments on this topic on my personal blog. If you're thinking of living here, you should read them; but if not, never mind.