If, however, those left behind pay the taxes avoided by those who have fled, total welfare is increased. The mobile group is not exploited. The capital flight message. Tax havens do not create mobile capital. The real problem is high taxes and oppression.
High taxes reduce the return to owners of capital and labor.
Either way, the impact of high taxes is welfare reducing. By implication then, the impact of tax havens is unmistakably welfare enhancing. This is information that political leaders need to have in order to make fully informed decisions about tax policy. Rather, it is a mechanism designed to protect members of the OECD cartel. The Institute for Economic Freedom, all rights reserved.