The crackdown on international tax havens is worthwhile

Pro argues that the likes of Soros "have the opportunity to shift money below the authorities radar" while "decent ordinary families are paying shifty tycoons tax bills." Actually, there is no reason why anyone couldn't use a foreign tax haven to speculate in current exchange. Why don't we all do that? It is because it is a peculiar high risk enterprise, and one that requires very little government infrastructure to conduct. Most of us are involved in activities that require consumer or government markets, and require communications and all the other things that taxes pay for. The oddball things Soros and his kin do require very little of what taxes pay for, so it is unfair that they be charged for those things. Beyond that, Pro supposes that the rich are characteristically escaping taxes through tax shelters, unfairly burdening ordinary people. That's not true. In the United States, the top 10% of income earners are paying 90% of the taxes; we are rapidly approaching the point where half of income earners pay no income taxes at all. In New York City, half the taxes are borne by fewer than a half percent of the taxpayers. Ordinary people are getting vastly more government services than they pay for. To the specific points: 1. Pro argues that even though profits are repatriated, that the original tax on the profits is still lost. That's true as far as it goes. It still means that the loss of tax revenue is not as great as it might be. Also, if fairness demands that profits earned in foreign countries be taxed, then fairness also would dictate that losses incurred in foreign countries be tax deductible. Out friend Soros, in an "oops" moment, lost several hundred million dollars virtually overnight. (I'd never do that.) One wonders what the overall track record is of all the people who use tax havens. It might be a net loss, because these are highly speculative ventures. In Pro's argument, only winners count. The repatriated profits, however, in fact only come from winners. So repatriated profits are a greater offset that it seems. 2. I argued "It loses very little revenue, because only a few types of transactions are economic in tax havens." Pro responds, "We don't know that to be the case as tax havens are, by definition, secretive." So is it really possible that there are vast numbers of Walmart stores, wheat farms, or trucking companies secreted away in Curacao? No. it isn't possible. List all of the things that go into a modern economy, and then strike off the ones that are impossible to move to a tax haven. What is left? Really nothing much but some forms of esoteric financial wheeling and dealing like currency speculation. Moreover, those transactions are not very secretive. Tax havens are not "by definition" secretive as Pro asserts. For many years, the U.S. was a tax haven with respect to Europe; we've pretty well fixed that now. Everyone knows about Soros' business in Curacao. What is secretive is money stashed by drug lords and by dictators planning for retirement. I agree with Pro that illegal transactions ought to be tracked down. Secrecy can be maintained with or without a tax haven. This is debate is about tax havens. 3. I argued, "It is a violation of sovereignty for one country to tax earnings made within another." Pro's rebuttal is that sovereignty is violated all the time, he cites the cases of Iran and North Korea being pressured over their domestic policies. I believe it is appropriate to pressure countries over human rights violations, because human rights have an agreed-upon universal nature. However, I see no right of government to shake down people for high taxes, and especially no right to tax enterprises conducted in other countries. I would assert the opposite, that there is a right to escape high taxes, providing one is willing to give up the services provided by the taxes as well. How far should big government be allowed to reach in its desire to grab you by the heels, turn you upside down, and shake the money out of you? I would say not as far as Curacao. 4. Pro argues "...high tax economies will continue, as they do now, to discourage inward investment. It is for these countries' governments to weigh up the effects of this against the increased welfare of their population..." He asserts that it is the sole province of high tax governments to determine the tradeoff between taxes and services, and to then impose that decision worldwide. But why do low tax governments have no right to make the same tradeoff decision, and decide in favor of lower taxes and services? Pro does not suggest why high-tax countries have this unique right. I believe it is because he knows, and I think all believers in big government also know, that if they go too far in taxation, people of ability will leave -- if they can. Only by destroying alternatives can this be prevented, so they set out to do that. Pro thinks France is a wonderful place because there are only a relatively few examples of conspicuous wealth, and he claims that as virtue of high taxation. By that logic, North Korea must be a paradise, because there are even fewer examples of conspicuous wealth. Ah, but North Korea has universal poverty and France does not, so all government has to do is stop high taxation short of completely destroying the economy. But what keeps government from going too far? In North Korea, the people could not leave so there was no ultimate deterrent to complete subjugation. That story is played out in old East Germany, in Cuba, and many other places. The French, however, can still escape and that's a deterrent. The whole point of Pro's arguments is that no escape from high taxation should be allowed anywhere. In summary, it's fine to crack down on criminals, but this debate is about whether any country on earth should be allowed to have low taxes on transactions taking place entirely within its borders. They should, because it is unfair to tax for services not used, because international sovereignty should extend to countries having their own tax policies, and because people have a right to escape excessive taxation. The resolution is negated.