I sometimes make fun of the English, for reasons ranging from asinine laws to milquetoast politicians to horrid healthcare policy.
But at least some U.K. elected officials are willing to stand up for tax competition and fiscal sovereignty by defending low-tax jurisdictions. In previous posts, I’ve applauded Dan Hannan and Godfrey Bloom for great speeches at the European Parliament.
There are also some sensible people in the U.K. Parliament, most notably Mark Field.
Here are some excerpts from an article in the U.K.-based Telegraph.
A conservative MP has spoken out in defence of tax havens and against what he called “a one-sided debate that demonstrates a fundamental lack of understanding of their role in the global financial market”. …In an attempt to balance the “one-sided” debate on international finance centres (IFCs), Mr Field…advised the UK government to think twice before imposing more regulation on these jurisdictions. …In a bid to dismiss the age-old belief that tax havens attract investors purely because of their tax regimes, Mr Field argued that it is a combination of their political stability, familiar legal systems, quality of service, lack of foreign exchange controls, and tax and legal neutrality that make them ideal locations to deposit money.The current financial crisis, he continued, had more to do with poor regulation and mistakes made onshore rather than offshore, and if the EU pressed ahead with its intention to harmonise tax systems across international borders “it could potentially represent the end for healthy tax competition… Tax harmonisation and cooperation, added Mr Field, was simply Brussels-speak for exporting high tax models on continental Europe to low tax jurisdictions.
These issues are just as relevant for the United States, but how many American politicians stand up and defend free markets and jurisdictional competition as a means of restraining the political predators in Washington?
I’m re-posting my video on The Economic Case for Tax Havens below, for those who haven’t seen it. But I also want to call your attention to this chart from the Treasury Department.
You’ll have to click and enlarge it. You’ll see that it shows the amount of capital invested in America from various parts of the world. The “C” category shows that more money is invested in America via Caribbean banking centers such as the Cayman Islands than from any other source.
And this is just one type of foreign investment. As I’ve explained elsewhere, foreigners have more than $10 trillion invested in the U.S. economy, in part because the United States is a tax haven for foreign investors.
So when Obama climbs into bed with the Europeans to push a global network of tax police, he’s pushing policies that ultimately will do great damage to American competitiveness.
Let’s close by returning to the original theme of wise and astute Englishmen. If you want a good defense of tax competition and tax havens, read what Allister Heath wrote last year.
[…] the way, I cited the Desai-Foley-Hines paper in my video on “The Economic Case for Tax Havens” because it makes the key point that governments hurt their own economies when they go after […]
[…] P.S. I’ve previously cited other tax haven-related research and analysis from the United Kingdom, most notably from Allister Heath, Dan Hannan, Philip Booth, Godfrey Bloom, and Mark Field. […]
[…] Here’s my video on the economic case for tax […]
[…] Here’s my video on the economic case for tax […]
[…] While the U.K. government is very misguided on fiscal policy issues (with the exception of Mark Field), there are a couple of Brits in the European Parliament. You’ll enjoy these short speeches […]
[…] a couple of anti-tax haven videos, I feel compelled to post one of mine for some balance. And since I recently posted my video on the economic case for tax havens, here’s my video on the moral case for tax […]
Zorba, citizenship-based taxation is bad enough, but this whole FACTA nightmare has added yet another negative element to being an American overseas. I don’t want to renounce, but I have to because I’m tired of hearing “No.. you are American.”
These new laws that the “geniuses” in Washington have conjured up have caused nothing but discrimination to Americans abroad.
For the American individual, tax competition is largely a mute point, so long as the American people insist on citizenship based taxation of foreign earned income by foreign domiciled individuals, thus leaving as the only option renouncing land relatives and family on a permanent basis if you don’t want to pay taxes to the distant homeland, AND last but not least, to add insult to injury, imposing a very substantial tax penalty on any individual who tries to permanently move already taxed income outside the US (exit taxes on emigration).
Closing the exits. i.e. attempting to sandbag fundamentals with legislative gimmicks is setting up America for an explosively nasty situation as its declining years move along. While this may be a localized aberration to an otherwise still freer America, no other modern country has such an oppressive policy in this area — a substantial indication that American adherence to liberty is more a result of historical coincidence and momentum rather than rational thought — and as such thus easily lost.