"Taken in that light, you aren't paying income taxes so much for government services as you are paying for American protection against your funds being confiscated. Of course, I'm sure that there are dangers of that happening even here, but it is a daily occurance overseas."
Actually, your information is woefully out of date (about 10 or 15 years).
To begin with, today the United States government confiscates more dollars, per capita, than any other western style democracy in the world. The reason is simple. The United States claims the right to ALL of a citizen's assets, regardless of where in the world those assets were acquired or where they are domiciled. Furthermore, one agency or another of the US government makes such confiscations on an almost daily basis and without due process or a follow-up conviction. That means that as a US citizen, your entire estate is at risk every day. See Forfeiture Endangers American Rights (FEAR) for a chronicle of just some of the more blatant confiscation abuses of the US government.
On the other hand, even the most tyrannical of foreign governments never attempt to seize assets outside of their own borders, unless of course, those assets were stolen from the government or the royal family. Even if they wanted to, they don't have the power. That means that the most that you can lose by any single event is what you have invested in that one country. Moreover, confiscations by foreign governments rarely happen outside of three contexts - court ordered seizures as a result of a conviction, violent revolution and the number one reason - pressure from guess who... the US government, wanting the assets of US citizens. But, if you are crazy enough to have invested your money in Venezuela...
In fact, most of the favored tax haven nations have very stable parliamentary governments. Furthermore, a large number of them are members of the British Commonwealth, adding significantly to their political stability. Many others have similar ties to France, Holland and other well established nations. In fact, if you have enough Irish blood, you can get an Irish citizenship almost immediately and you will find that Ireland is considered to be a tax haven nation. Another member of the Commonwealth that is very stable is Belize. They got their independence in 1981 and they are very protective of their sovereignty. They take severe offense to other nations trying to tell them how to run their government. As a result, privacy laws in Belize are among the best in the world right now. Bermuda is also very stable, although it is somewhat expensive to live there. And, those are just a few examples.
I really suggest that you check out the Escape Artist web site for their country profiles.
Also, check out the Action America links page for more links to expat related material.
As for upstreaming, it is very illegal, unless you are a foreign citizen. If the IRS ever tracks the ownership of the offshore company back to you, they will fall on you like a ton of bricks. True offshore entities, on the other hand, use upstreaming to gain great advantage over US companies. When US companies use that tactic, they must limit the offshore payments to realistic and justifiable amounts or risk losing large sums of money to IRS confiscation, should the IRS decide that it is upstreaming. Some US companies do upstream in an attempt to stay even with their foreign competition. Others just leave and become that foreign competition. But, where they go is as varied as their businesses.
That's why I urge anyone thinking about moving offshore or investing large sums of money offshore, to learn as much as possible, before making a decision. There is no one easy answer for every company with a certain level of income. That's why I am constantly urging people to develop an exit strategy, even if they never plan to use it. That way, should things happen to get bad enough, you have already done your homework and don't need to waste time trying to determine just which country is best for you. The reason for that is because if that time should come for you, you probably won't have time to learn and do everything that you need to do before leaving.
But, count on it. With over 100,000 wealthy Americans leaving every year, there must be something out there that is a damn sight better and safer than what they are offered here. In fact, things are getting so bad here that every month or so, another country passes the United States on the freedom scale. The phrase, "With liberty and justice for all," now seems to apply more properly to many foreign countries than to the United States. Don't be afraid to move offshore. Just do your homework, first.
I presume that you understand what that means if you had any money down in Argentina today...