In defense of tax havens

Washington Times ^ | April 7, 2009 | Editorial

[JohnRLott]

Last week's Group of 20 statement on strengthening the world financial system railed against risks that tax havens pose to the world economy. Contrary to what this group of the world's largest economies claims, "ending" so-called tax havens would not fix the world economic slump. The only impact that ending tax havens would have would be to raise tax rates around the world, thus reducing economic growth and making the world poorer.

The White House told this page that the existence of tax havens "costs countries tens of billions of dollars every year in tax revenue." It also argues against tax havens because when businesses flee higher taxes, that "distorts business decisions, encourages inefficient outcomes and undermines effective valuation."

What President Obama sees as problems, we see as benefits. High-tax countries face a problem - it is called competition. Wealthy and high-income people do not like giving the vast majority of their money to government, so they sometimes pick where they live based on tax rates. For this reason, competition keeps sensible countries from raising taxes too high because that can cause people and their resources to go elsewhere.

We see the same tax competition within our own shores. It is not surprising that someone such as Rush Limbaugh broadcasts from Florida, where there is no income tax, instead of New York, where his national career started but where taxes are high. The distortion decried by the White House isn't the move to live or work in low-tax states or countries. The distortion is created by onerous taxes that make individuals and businesses look for more favorable financial climates.

The very definition of a tax haven used by the G-20 gives pause. . . . .

[Myrddin]

If there isn't a "tax haven", there will be a fat mattress holding capital that is doing absolutely nothing. It will stay on the sidelines as long as punitive taxation exists to wrest it from its owners and producers. There is no obligation to put your private property in the line of hostile fire from the government.

[goldstategop]

Offshore banking isn't illegal. You just can't hide any income stashed there from the IRS.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[WellyP]

“Tax havens” should be treated like the world’s piggy bank. Break it and it can never be filled up again. Tease the money out and it will eventually be refilled.