Post by dgriffin on Mar 31, 2008 9:33:00 GMT -5
Why Tax Havens Are a Blessing
By Daniel J. Mitchell
Posted March 2008
Smugly confident about the righteousness of their cause, European countries and international bureaucrats are pushing for a crackdown against tax havens. But their crusade will do more harm than good.
When we think of tax havens, we tend to imagine yacht-besotted enclaves of shadowy international dilettantes, dripping with jewelry and laughing about the latest tax loophole their accountants have found. This popular image—and the fact that few of us have million-dollar private bank accounts in Monaco or Andorra—makes it all the easier for many to cheer German Chancellor Angela Merkel along in her crusade. Why should the superwealthy get off the hook, the usual logic goes, while the rest of us pay our fair share? Yet the conventional wisdom could not be more wrong. We are all beneficiaries of tax havens in ways you might not expect.
First, if you live in a developed country, your taxes are probably much lower today than they were 30 years ago, thanks in part to tax havens. In 1980, top personal income tax rates in OECD countries averaged more than 67 percent, and corporate rates that year averaged nearly 50 percent. To compound the damage, countries routinely imposed extra layers of tax on capital, including dividend taxes, capital gains taxes, inheritance taxes, and wealth taxes. These policies discouraged saving and investment, stifling economic growth and causing significant economic hardship.
MORE AT:
www.foreignpolicy.com/story/cms.php?story_id=4230
The crusader: German Chancellor Angela Merkel has been leading the fight against tax havens. Will President Hillary Clinton follow?
By Daniel J. Mitchell
Posted March 2008
Smugly confident about the righteousness of their cause, European countries and international bureaucrats are pushing for a crackdown against tax havens. But their crusade will do more harm than good.
When we think of tax havens, we tend to imagine yacht-besotted enclaves of shadowy international dilettantes, dripping with jewelry and laughing about the latest tax loophole their accountants have found. This popular image—and the fact that few of us have million-dollar private bank accounts in Monaco or Andorra—makes it all the easier for many to cheer German Chancellor Angela Merkel along in her crusade. Why should the superwealthy get off the hook, the usual logic goes, while the rest of us pay our fair share? Yet the conventional wisdom could not be more wrong. We are all beneficiaries of tax havens in ways you might not expect.
First, if you live in a developed country, your taxes are probably much lower today than they were 30 years ago, thanks in part to tax havens. In 1980, top personal income tax rates in OECD countries averaged more than 67 percent, and corporate rates that year averaged nearly 50 percent. To compound the damage, countries routinely imposed extra layers of tax on capital, including dividend taxes, capital gains taxes, inheritance taxes, and wealth taxes. These policies discouraged saving and investment, stifling economic growth and causing significant economic hardship.
MORE AT:
www.foreignpolicy.com/story/cms.php?story_id=4230
The crusader: German Chancellor Angela Merkel has been leading the fight against tax havens. Will President Hillary Clinton follow?
