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Stephen Pollard

ByStephen Pollard, Stephen Pollard

Opinion

Tax rates and tax havens

February 26, 2008 24:00
2 min read

There's an excellent piece by Dan Mitchell in the WSJ on an unpopular case: the case for tax havens, prompted by the German government's purchase of information stolen from a Liechtenstein bank (followed, it now seems, by HMRC buying the same data). Here's an extract:The Paris-based Organization for Economic Cooperation and Development is trying to use the imbroglio to resuscitate its initiative against tax competition. Willem Buiter, a professor at the London School of Economics, is using the issue to push an even more radical agenda: the forcible annexation -- by nations like Austria and France, under some unknown authority -- of jurisdictions such as Liechtenstein, Andorra and Monaco.

At best, these crusades against tax havens are misguided. At worst, they are an effort to create a tax cartel for the benefit of high-tax nations. This OPEC for politicians would mean higher tax rates for everyone and bigger government.

Wealthy tax evaders may not be sympathetic figures, especially to those of us who meekly comply with the law. But low-tax jurisdictions serve a valuable role in the world economy. Simply stated, they keep other governments honest. Globalization makes it easier for labor and capital to cross national borders, forcing governments to improve tax policy to keep the geese with the golden eggs from flying away.