The FT has this morning reported that:
An Obama administration crackdown to stop US businesses pursuing takeovers that let them escape the country’s high corporate tax regime was dealt a sharp rebuke on Thursday, after two deals paved the way for more companies to move their domicile to Europe.
In separate transactions, three of Coca-Cola’s European bottlers agreed a $27.5bn merger to form the region’s largest distributor of Coke products, while fertiliser maker CF Industries acquired assets from rival OCI for $8bn including debt.
Both will create new UK-based companies in so-called tax inversion deals, highlighting corporate America’s desire to move its tax base overseas.
It's the last sentence that is key to my argument. Since 2010 George Osborne has created a deliberate, high risk, and extremely aggressive tax competition policy for the UK, using the title Britain Open for Business. The strategy has been based on three key planks.
The first has been to move the taxation of UK based groups of companies from something that approximated to a tax charge on worldwide income to one that very definitely only brings UK source income into tax. A deliberate blind eye is turned to whatever happens elsewhere.
Second, it has been based on the UK's continuing light touch regulation when compared to some other countries.
Third, large company tax rates have been slashed from 28% to a newly announced low of 18%.
The three in combination are classic tax haven behaviour: all tax havens turn a blind eye to whatever happens outside their domain, all have light touch regulation and all use a low tax rate as their calling card.
The trouble is the UK is not some micro state. It is a major economy with a financial services sector that has a proven track record of abuse that is in need for radical reform if it is to stand up to scrutiny. And the UK cannot afford to just skim the cream off the top of profits artificially relocated to be recorded here: we have a real need for corporate tax revenues and as I have shown the UK's approach to corporation tax will cost it £27.8 billion over the next five years - money we cannot, according to the government, afford as we have a deficit to clear in their opinion, and which artificial relocation of a few people working in a head office will not replace.
So what is this all about?
First it is about a dogmatic belief in tax competition.
Second it is about undermining the creation of an international accord on tackling tax abuse, to which lip service is simultaneously being given.
Third, it is about a deliberate policy of increasing inequality, because that is what motivates tax haven governments: there can be no other explanation for their behaviour.
Fourth then it is about a deliberate ploy to shift the burden of tax from capital onto labour.
And fifth, as a result, it is about using the power of elected office to increase private wealth at cost to the state.
In the process it is about engaging in a process of economic warfare to undermine the well-being of supposed partners - which is very clearly how the US will see this.
The consequence is all too obvious: these are actions to increase economic, social and political instability. At a time when there is desperate need for all of them to describe the policy as wrong-headed is to be kind to it. It is not even an act of wanton folly. It is actually an act of aggression for which we might well have to pay a price.
That price will be economic: as the sorry history of Jersey reveals, being a tax haven does not pay and it very definitely does not clear deficits.
It will be social as Cayman reveals when it relies on charity to provide free school meals for its children who live in poverty.
And it will be political: the G7 has put much store on beating tax abuse. If the UK undermines that process the opportunity for cooperation on other issues will be dramatically reduced.
The UK cannot afford tax warfare. Nor can the world. George Osborne is promoting it. We should all be worried.