Tax-News.com published an article which plumbs the depths, even when measured by its own normal levels of depravity. It notes that:
The CIA has recently updated its list of countries ranked by Gross Domestic Product, using figures from 2006, 2005 or 2004, with Luxembourg in the lead, and no fewer than thirteen out of the top twenty countries being low-tax jurisdictions.
It then lists the top 20:
1 Luxembourg $ 71,400;
2 Bermuda $ 69,900;
3 Jersey $ 57,000;
4 Equatorial Guinea $ 50,200;
5 United Arab Emirates $ 49,700;
6 Norway $ 46,300;
7 Guernsey $ 44,600;
8 Ireland $ 44,500;
9 United States $ 44,000;
10 Cayman Islands $ 43,800;
11 Andorra $ 38,800;
12 British Virgin Islands $ 38,500;
13 Iceland $ 38,000;
14 Hong Kong $ 37,300;
15 Denmark $ 37,000;
16 Canada $ 35,600;
17 Isle of Man $ 35,000;
18 Austria $ 34,600;
19 San Marino $ 34,100;
20 Switzerland $ 34,000.A critic might point out that the populations of the 13 leading tax havens all added together wouldn't fill up New York City; but that doesn't dilute the message.
What's that message. Well according to Tax-News.com it's this:
Dan Mitchell of the Centre for Freedom and Prosperity points out that: "In an ideal world, other nations would emulate the so-called tax havens. Instead, high-tax nations persecute these jurisdictions as part of an effort to create an OPEC for politicians."
Pardon? Let's get serious. Tax havens get rich by pursuing a policy of tax competition. Peter Dietsch, a Canadian academic has a rather neat definition of tax competition in a new paper not yet available on line, He says:
Tax competition refers to the practice of pursuing the objectives of fiscal policy in ways that create fiscal externalities. Fiscal externalities are defined as the effects of one country's fiscal policy on the welfare of the residents of other countries.
Or in plainer English, these places have tax policies designed to steal tax revenues from other countries at cost to their citizens. And let's be clear, that is theft. No wonder then that Pulitzer Prize winning journalist of the New York Times calls the Center for Freedom and Prosperity "the tax cheats lobby" (Perfectly Legal, 2003, page 237). He's right.
And now wonder that Tax-News.com ask:
And where are the 19th century's leading nations: Great Britain, France and Germany? Japan is also a surprise exclusion.
Actually they're not there because they're the victims of this crime.
Which shows just how wide of the mark Tax-News.com is when it notes that:
A critic might point out that the populations of the 13 leading tax havens all added together wouldn't fill up New York City; but that doesn't dilute the message.
Oh yes it does. Most of the world doesn't steal. the politicians, accountants, lawyers and bankers in tax havens do. That's what this evidence shows. How much plainer does it need to be?
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It’s not on the point, but Equatorial Guinea in fourth??? Have I missed something?
Ralph
Oil
Richard
Sorry, but tax competition is the best way to prevent tax abuse.
Take Finland. It is demanding that the rest of the EU raise their alcohol taxes to their levels to cut back on Finnish ‘alcohol tourism’. Are you saying that the rest of the EU is sealing from Finland because their alcohol taxes are lower, or is it ok because they did not intentionally target the Finnish traveler?
What about Every single traveler who has purchased ‘Tax-Free’ goods, where they could have purchased the product back home, at a price that included taxes? Tax-free shopping is targeted at purchases from citizens of other nations, which seems to fit the definition of tax theft.
(Feel free to delete my comment again, but I would rather appreciate comments explaining why my comments are disagreeable)
Fred
This is complete nonsense and shows, as ever, the contempt for democracy that is present in almost all the comments made by those who argue for tax competition.
The ballot box is where abuse in government is prevented. Nowhere elses.
And to use duty free as an argument on tax competition when the issue is about global poverty, democracy, transaprency and accountability is, I am afraid small minded.
Richard
Dear Richard,
Thanks for your comments.
Corporations do not vote. Sure, their shareholders do, but many corporations are held by an international group of shareholders who have no say in the politics of the country the corporation whose shares they own is domiciled. Redomiciliation (moving a corporation to another country) is something that the shareholders certainly must approve in a vote. It is their right to relocate a corporation for any reason, especially to relocate a corporation in a more tax-friendly jurisdiction. Anyway, at the end of the day, if they receive dividend income, they are responsible to pay any tax due to the jurisdiction they live in.
There is no contempt for democracy. There is a basic fact that the many will vote to tax the hell out of the few, as long as they think there is something in it for them. This is where the politicians help by redistributing money to the poor in exchange for their votes. All the better that the money is take from wealthier people. The rich are not able to defend themselves through voting. So they have the option of moving to another jurisdiction, or moving their assets.
I am surprised that you discount the tax-free shopping. It is an indicator of how the general population views the taxes that they are currently being subjected to. You also might want to reconsider the thought that my comment was “small minded”. Consider all of the environmental waste being generated by shipping tax-free goods all across Europe, starting with lorries full of heavy alcohol. How many channel ferries would fold if UK Citizens would not be able to bring back their French wine and other good acquired abroad? How much excess wight is carried in airplanes just for the carriage of good that would have been purchased at home had it not been for the high prices due to taxes? In many cases the countries do not even need to target tax tourism, simply because other countries just have high taxes, VAT or otherwise. Finland and their high alcohol tax is a perfect example. their response is to demand that the rest of the EU raise their alcohol tax to match their level.
Want to solve global poverty? Stop giving money to governments. Give it directly to the poor in those poor countries. Stop the UN from giving aid to poor countries and charge them for the aid and professional services provided. Just as high taxes disrupts a market, low-price and free goods and services also disrupts markets, mainly in the developing world. Anyway, why tax people in one country to give it to people in another? This completely discounts the responsibility of that poor country’s Government. How much tax money do you send to Zimbabwe?
Thanks,
Nice site. I just don’t buy the argument. This after living in both the high tax EU and the lower-tax US, which amazingly I pay more taxes to, due to a higher salary.