Let it not be said that the politicians gathering to celebrate an orgy (er, steady on, Ed) of Keynesian delinqency and transnational socialism are letting this current financial crisis go to waste. The G20 countries have agreed to a crackdown on those pestilential things, tax havens. I have defended them before and will do so again. What we are seeing is a determined effort to create a global tax cartel. Cartels, unless backed by brute force, tend to break down eventually. The G20 are making lots of blood-curdling threats about sanctions and so forth. What is Germany or Italy going to do – invade Switzerland? Good luck with that, gentlemen.
At the root of the hatred of tax havens is a hatred of freedom, pure and simple. If you believe a democratically elected government, say, can seize the wealth of a portion of its citizens, then you will believe that that minority can be more or less robbed, held hostage and prevented from going abroad. Socialists such as Richard Murphy believe that if 51 per cent of my fellow citizens want to help themselves to the contents of my bank account, then I am being “undemocratic” and a bad citizen if I choose to park my cash in the Caymans or wherever. Well, why not go the whole distance and require anyone who has an offshore bank account either to close it or be forced to get an exit visa if they wish to do so? We may be already reaching that point. If, on the other hand, you believe people are entitled to their property regardless of what their fellow electors think, then tax havens – “haven” is a place of safety, remember- are an important escape route and bulwark against looters. When politicians want to shut down places of safety in a time of crisis, it is well to be cynical about the motives of those involved. Especially if they happen to be such characters as Gordon Brown or Barack Obama.
The sheer cynicsm of it all is breathtaking. Whatever the cause of the current financial crisis, I think it is pretty fair to say that it did not originate in tax havens. Switzerland, in fact, has been hammered by the crisis; its biggest wealth manager, UBS, has lost an estimated $49 billion in write-downs connected to the US sub-prime disaster. The $50 billion Ponzi scheme fraud of Bernard Madoff happened onshore, right under the noses of the SEC, rather than in some far-flung island in the South Pacific. The huge losses incurred by banks have been nothing whatever to do with so-called “tax leakage”. And in the US, there is already a tax haven, known as the state of Delaware. And the UK has been – well until recently – a tax haven on certain definitions. Ditto places such as Ireland or even Belgium.
Rant over. Thanks for your patience.
I notice they’re also having a go at hedge funds which is odd seeing as as far as I can work out hedge funds have had nothing to do with the current crisis.
Someone should ask the Germans exactly where will the next victims of genocide hide their money if Switzerland is shut down?
Wow JP! I was just watching it on C4 News and I think we mind-melded. They made an opportunity out of a crisis was my first thought.
Apparently Obama or some other arse-bugling toss-stick (I think Obama) said, “The Era of Privacy in Banking is Over”.
For fuck’s sake!!!
You tell ’em, brother!
A pint of Guinness held high for this rant!
Johnathan Pearce (London)
Dear Johnathan, This is not a rant, merely a forceful exposition of the bleedin’ obvious. I like it lots.
When a large number of people agree with them lefties say that it is the democratic will and must be obeyed. When these same people disagree with them the call it populist and a one way road to fascism (forgetting Fascism was a left wing phenomena).
This is what I’d like to call ‘Indian Bicycle Marketing’. So- called tax havens are more or less an irrelevance in the grander scheme of things, according to HMRC estimates the amount of UK tax ‘lost’ is only a billion pounds or two, i.e. a fraction of one per cent of total UK revenues; or a fraction of the VAT that HMRC pay out to carousel fraudsters. And what sort of tax system Johnny Foreigner has should really be no concern of ours.
But both right wingers and left wingers rail about them to emphasise their fundamental differences over a quite trivial topic. Meanwhile, on Planet Wadsworth, there are no taxes on things that can be moved abroad (like jobs or productive investment), there’s only tax on the one thing that you can’t take abroad (like the fine system that operates for tax exiles in Switzerland).
That’s that fixed.
How exactly is “publishing a list of tax haven countries” going to have any effect at all ?
http://www.shanghaidaily.com/article/?id=396439&type=Business
Isn’t the UK considered to be a “tax haven”, by Non-Domestic Russian oligarchs etc ?
Personally, I would appreciate them publishing a list of “tax haven countries”; that way I’ll know where to go in the (unlikely) event I ever have enough money to be in need of a one.
Isn’t Britain itself a major tax haven for foreigners? How have you samizdatans been exploiting the foreigners who are compelled to live amongst you? You just don’t want Britain to lose its’ special status! London will become just an ordinary city. Shame on you Shame!!!
Genuine financial privacy isnt going anywhere… Bastards such as these have been railing about it for centuries, and nothing has ever changed, money and capital will always find an outlet that gives them more breathing room.
Second, too many of the self righteous hypocritical scum and their friends themselves hide pig loads of money in the worlds network of private banking facilities, they can’t afford to shut it down for their own sake. Much of this tax haven attacking is just blame diverting talk.
Like most political dreams, it won’t go very far, and whatever headway it does make will be riddled with failure.
My personal way of dealing with this bunch of characters is to poke some fun at them. I used the whole ‘ipod’ incident to come up with a website – http://www.SorryQueenElizabeth.com where I had the most fun with the FAQ page. If we’re all going to hell in a handbasket, lets at least have some fun doing it!
i.e. ‘Never let a good crisis go to waste!’
By the way, having had a chance to look at the details of the G20 communique in detail (that is the kind of sad bastard that I am), it is not actually all that clear what these countries will be able to do to shut down these havens.
Mark, here you go again, as Ronnie Reagan used to say. Your argument in this case is that such a tax is hard to avoid, not that it is less unfair than say, income tax. But assuming we scrap taxes on jobs and investment and put it all onto land, that will be one mother of a tax. It will hit a lot of people. And the rich will find ways to avoid it. They may of course just leave the UK.
The best way to put the pressure on tax havens is for existing countries to slash their tax rates. People don’t mind paying low, flat taxes and the proportion of taxes paid by the rich tend to go up when marginal tax rates are cut. This has been the experience of the UK and US in recent years when top rates of income tax were slashed.
Oh.
So let me get this straight.
I operate in country X, according to that country’s rules, receiving the services of the country in form of eg. law enforcement system, possibly healthcare (of which in many countries a lot is subsidized by the government), et cetera.
However, I disagree about the amount of money I have to pay back to the country both for these services and for indirect services or benefits that I receive from being part of the country.
Therefore instead of going through the painful process of trying to convince other people that money should be paid differently (probably less? just a wild guess you understand), I choose to use the services, but evade or reduce the payment, by pretending I am really operating from different country.
Interesting point of view, of course.
Gnudiff, people who live and work in the UK will still be paying a lot of tax in this country, even if some of their tax affairs are effectively offshore. It is not possible to escape the tax net entirely.
Anyway, I am not a democrat; I am a liberal who believes in respect for property rights.
The flaw in Gundiff’s argument, or rather the aspect of the problem that his reply is blind to is the fact that the paying of taxes doesn’t necessarily mean the services are there to be taken advantage of. Thus many people end up paying twice, once in taxes, and yet again to send their children to private schools (in the US) due to the deplorable state of the public ones. The same goes for things such as roads, in which the taxpayer pays initially thru the tax system and then a second time when he has to have the front end realigned after encountering a tank-trap sized pot-hole on a poorly maintained road. The same goes for taxes and police protection which sees entire neighborhoods tax themselves yet again a second time to hire pvt security firms to provide the protection they’ve already paid for thru the Govt. tax system but is not forthcoming. At some “tipping point” the tax-payer comes to the conclusion that this is a mug’s game, that he is a fool for paying high taxes and not getting his money’s worth and is being played for a sucker by both his govt. and those who pay no income taxes yet enjoy the benefits. THIS is what drives many beyond sheer greed (there will always be those) to consider tax havens.
Virgil gets today’s prize –
‘not getting his money’s worth and is being played for a sucker’
This is a BIG reason for offshore accounts.
Ask anyone if they think they are getting their ‘money’s worth’ from the gov’t for the taxes they pay’.
If they say yes, then ask why not give EVERYTHING you earn to the gov’t and let them take care of you totally ?? I leave it to the reader to picture the facial expression you’ll get !!
Gov’t are FAR too inefficient to do ANYTHING on a reasonable cost basis. ( Gerald Ford once said that he doubted the Federal Gov’t could make beer for less than $50 a six pack ! )
Another reason to ponder for the ‘crack down; on offshore accounts.
Aren’t these accounts mostly held by evil greedy RICH people and the only reason they are rich and want these accounts are so that YOU can’t get YOUR share of their ‘wealth’ ??
I mean, the ONLY way the people can be rich is if someone else is poor. Think of all the people starving BECAUSE YOU have a private jet.
Socialism at its finest ( of there is such a thing )
I’m perfectly happy to pay for the services I receive from the government. I’ll even help pay for services I don’t use. However, I’m not happy about paying far more than what those services are worth. That’s the fraud in graduated income tax rates: you don’t just pay for what you get, you pay what someone else thinks is what you can afford to pay. And that’s just theft. If everyone paid a flat amount (not a flat rate, but our proportionate share of the government’s cost, with no exceptions), that would be a fair taxing system. And before you scream about some people being unable to afford their share, that’s merely proof that the tax burden is too high, and government has outgrown its proper size.
Also, what’s missing in Gundiff’s argument is the fact that much of the economic activity which the government seeks to tax didn’t actually occur in “Country X”, but some other jurisdiction entirely. There is absolutely no justification for claiming the right to tax those revenues.
Thanks for the counterarguments.
I think I can spot a couple of flaws in them, too, I will try to ask more questions a bit later.
I have only bad news to add, really.
First, there is a lot they can do, through the imposition of withholding taxes on outflows to designated countries, for example. Also, they can (and in fact some countries already do) provide for imputed earnings on funds in certain countries, and tax them at home.
Second bad news is that it is more of a sham than even it seems. From all of people the Economist (Link)(yes I know they printed Richard Murphy’s crap as well) is a sliver of sense in the mainstream debate.
It is sad, but I think the US has finally fallen. The indolent throngs have realized that they can loot their neighbors with impunity and that they will even be considered the aggrieved party if one of their marks tries to hide a little of what they have earned.
As sad as that makes me as a US citizen, I can’t help but think if we had just had a little more support from ANYWHERE else on the globe rather than being constantly criticized as being athwart history yelling “stop” we may not have arrived at this juncture. The US has disproportionately borne the load in defending the west and the western ideal. The Atlas that was the USA is now shrugging and all of the Lilliputians with their imputed and socialized grievances can look to no one to bail them out from their follies. We have surrendered to their greater numbers… surely they will leave us alone now… right?
As it is, there is no where on the planet where a man can go to be free. The noble experiment that was the US Constitution has come to an end. The last redoubt against the legions of Mordor has fallen.
Anyone who is expecting a fellowship such as that formed by Reagan and Thatcher to ride to our rescue is likely to be sorely disappointed. Obama has the golden ring of power and all that he touches will wilt and die, never to be reborn in this age. The destruction he has wrought in 60 days will not be undone for generations, if ever. There is no one currently in politics on this side of the Atlantic who is made of stern enough stuff to overcome the weight of the entire world press corp and staunch the tide. All decent men have battened down the hatches and are waiting for the looting to stop.
We have arrived at a point I never thought I would see in my lifetime. A point where I don’t know which I fear more; that Americans will take up arms against each other again….. or that they won’t.
But this line (Link)is a doozy:
Actually, Ben Franklin, in strictly Constitutional terms Australia and Switzerland are still standing. Indeed Australia is in many ways the British Constitution’s last stand, and Australia has been more solvent than basically any country in the world for decades now.
But even combined those two countries are no Atlas, and Australia is at best a Frodo, or perhaps better yet Sam Gamgee.
Actually, Ben Franklin, in strictly Constitutional terms Australia and Switzerland are still standing. Indeed Australia is in many ways the British Constitution’s last stand, and Australia has been more solvent than basically any country in the world for decades now.
But even combined those two countries are no Atlas, and Australia is at best a Frodo, or perhaps better yet Sam Gamgee.
Agree w/Ben Franklin. I’m not sure we’ll make it to the midterm elections without an assassination attempt or an impeachment or something. It’s just bizarre.
I also agree with Ben Franklin (and kentuckyliz). Query: in terms of political and economic freedom, how is New Zealand these days?
So far so good.
I think I’d call that “mediocre”. Seems to be headed in the right direction, but tax rates are still very high and it doesn’t look like that’s going to change soon. And there’s still a lot of old socialist baggage left to unload.
Anyone have any other ideas?
I don’t remember the details now, but my understanding is that the baggage is not as socialist as elsewhere (excluding Oz) despite the mighty efforts of Dear Helen. Not a libertarian Utopia by any means, but then where is.
Good on you J.P. – keep fighting.
As for “tax havens” – many of them have historically HIGH taxes.
For example the Channel Islands (bar Sark) are still on their emergency World War II tax levels.
There is also a failure to understand the difference between tax avoidence and tax evasion.
If someone makes half of his income overseas it is not illegal (in most countries) for him not pay “home country” tax on that half of his income especially if he he already has paid tax on the income in the place he made the money.
“No, No, No, – the rich just by living here have to pay tax on all their income”.
O.K. then “the rich” will leave – surely even statists have no objection to that.
Apart from American statists of course – who try and demand money from people who have not even visited the United States for years.
Even formally renouncing citizenship does not automatically get these tin pot Fascists to stop trying to grab money (to spend on bailouts for people much richer than the people they are trying to steal money from).
By the way……
As Glenn Beck often asks (in stuff that is not even quoted out of context – the standard leftist trick).
“When did our friends on the left stop being opposed to Corporate Welfare?”.
Why the anger at a few million Dollars in bonus payments for AIG employees – but no anger at the HUNDREDS OF BILLIONS OF DOLLARS paid in bailout money to AIG (of which far more than a hundred billion Dollars has already gone off to other corporations in the United States and around the world).
Of course if one looks at the voting record of Barney Frank, Chris Dodd and Barack Obama (and where they got their campaign money from) it is clear they were never opposed to Corporate Welfare.
They were the biggest supporters of it – and lied and lied and lied.