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The continuing push to create a global tax cartel Life for me is hectic right now – for all the right reasons – but I wanted to quickly put up this link to an excellent commentary by Dan Mitchell of the Cato Institute, concerning the current US government’s drive against offshore tax havens, especially Switzerland. Governments such as that of the spendthrift US, UK and France are getting desperate for cash, and low-tax regimes which respect client confidentiality make for an easy target.
I can also recommend Dan’s recent book, co-authored with Chris Edwards, as a fine study of the whole case for tax havens and why they are a thoroughly good thing. Whenever you read someone arguing for ending “unfair tax competition”, what they really in fact want is to create a cartel. Most cartels, if not backed by states, tend to disintegrate in time, but are generally thought of as bad. Tax cartels are a prime example of cartels of the worst kind.
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See also Gordon’s disgraceful “New Global Bargain” or whatever newspeak term he is using right now.
A bargain is struck between two consenting parties. What he is trying to forge is a “New Global Fait Accompli”.
Does not have quite the same ring to it…
People (on left and right) get all het up about tax havens, but the total amount of tax that is evaded by using them is relatively small, i.e. a couple of per cent of theoretical revenues.
Anyway, good luck to them. In a sensible tax system there would be no tax evasion anyway, because there’d be no taxes on incomes and you can’t take land offshore.
Where’s Nick?
Not to fear! The existence of tax havens can never really be extinguished, someone always finds a way to hide their money, and someone always recognises a good profit to be had in helping that person do so. Whats more, how many of our softly sleazy western politicos and their cronies also depend on the existence of these places? No way they’ll truly allow their own ends of the cash sihon to disappear. I strongly suspect that much of the balleyhooing about tax havens is just a nice publicity game in the midst of all this general ranting about “greedy capitalists” and how they brought about the recession…
Although one does pause to wonder in certain moments when thinking about the crushing debt that is slowly weighing heavier upon the western democracies and making them increasingly desperate to trap any potentially fleeing capital.
Mark, The total amount may be small now, but I strongly suspect that this percentage will rise drastically in the coming years, maybe even decades. Even now, are you sure about that tiny percentage? I have heard on other occasions that nearly a quarter of the worlds capital is kept in tax havens. The untaxed gains on that seem to me to be much larger then a couple percent of total revenues.
This post was timely. The
BerlinTax Escape Wall is being built as we speak: Geithner: Obama to fight international tax dodgers.Yeah, like we didn’t see THAT coming.
I do have mixed feelings about this one. He certainly seems to have enough opinions about how my income should be spent.
I don’t know about Britain, but in the US much of the redistributionist support comes from the very wealthy. If offshore tax havens are shut down loopholes will be written into the law to keep the taxman at bay.
The government won’t see an extra dime from all of this.
Stephan, it may well be that a quarter of the world’s bank balances are held in tax havens, but they can only invest back into the real world economy, which is all subject to tax (or subject to withholding tax if real world company pays interest to offshore bank). Or maybe people own shares in real world companies via offshore trusts, those real world companies still pay corporation tax, payroll taxes & turnover taxes. So it’s only a smidgeon of capital gains tax or possibly stamp duty that is avoided or evaded.
I make a handsome living from all this, it is far more difficult than you think. And yes, shifting money offshore is dead easy, shifting actual profits is more difficult but not impossible, but taxing profits incomes, turnover and profits is inherently A Bad Thing.
My subsidiary point being that you can’t just roll up a piece of land and take it to the Cayman Islands, which is another argument in favour of the tax I am no longer allowed to mention.
Mark is correct that some forms of tax are a lot easier to avoid than others. With land taxes, they are relatively hard to dodge, but the ease of imposing land taxes is not, in itself, necessarily a recommendation for such taxes. (I will forbear to debate Mark all over again on the case for or against LVT for the benefit of this blog readers’ patience).
It’s the assumption behind the attacks on tax havens which I find so troubling as if our money belonged to the government and we should be grateful for being allowed to keep some of it.
People would be less willing to evade/avoid taxes if (a) the taxes were lower in the first place and less complicated; and (b) the money raised from them wasn’t comprehensively wasted. We need to drum this point into our dunderheaded politicians at every possible opportunity.
At present in the UK we pay half our income in tax and out of that taxed income I have to pay again if I want a decent education and health services that don’t kill you or for which you don’t have to wait an age. If that tax money were spent wisely and I didn’t have to pay again to get the services which I should be getting for the money which is taken from me – on pain of imprisonment – I would be better off. But no politician seems to understand this and so off they go wittering about getting even more of our money to waste.
The ability to move ourselves/our money to a lower tax regime is one of the few ways we have to get our message across in a way which even governments might understand.
The unemployment mandate in the “stimulus” package, refused by some states, is another example of “tax cartel” activity. States with uncompetitive high-tax rate programs wanted to use the federal purse to foist a similar burden on more competitive states.
In my opinion, the real problem with land taxes is that for most people, land is the only tangible asset of any possible great value which they will ever own, and when threatened with the loss of that property via failure to pay the land tax, never truly do own. Rule of law, property rights, and freedom of trade/ commerce
all go hand in hand. Some things should not now nor ever be under the threat of removal / taking, otherwise we never truly own anything
The United States of America is the Largest Tax Haven in the World:
http://www.heritage.org/press/commentary/ed100501.cfm
Like would had over the balances of Chinese, Venezuelan, Norwegian citizens who have bank accounts here in the US, these senators are retarded and should be fired.
Gee. An OPEC for taxes. What a SWELL idea…
Of course Mr Brown also wants a World Government to set bankers wagers – and to regulate banking (because Basel and its mathematical models have worked so well?).
It would be easy to laugh if it were not for the fear that boys and girls sitting at home are thinking “quite right – just what the bankers deserve”.
World Government brought in under the cover of the people’s hatred for bankers.
In my most paranoid moments I never thought of that tactic.
Already people are demanding that more than national governments bail things out – the E.U. must do so in the context of Eastern Europe (says the “free market” Economist).
Why just the E.U. – why not a World Government?
No doubt that will be the next idea.
A globel bailout.
No running away to New Zealand or other releatively sane places.