There's No Place Like Tax Havens

Any intelligent person or company should do whatever they can to minimize or avoid their tax burdens. (Notice I didn't say evade taxes.) Tax havens can be a useful way to protect personal or corporate wealth by legally reducing tax liabilities.

But the subject of tax havens is stirring considerable debate globally, as governments around the world are enacting programs to ramp up public spending, support failing industries, nationalize companies, and guarantee bank deposits - all these interventions require additional fiscal fuel. As governments require more money, tax havens are looking like great places to pilfer from.

According to the Wall Street Journal, the incoming administration is expected to come down hard on tax havens like Bermuda, where there is no tax treaty with the U.S. A handful of companies have already moved to Switzerland, which does have a tax treaty with the U.S. Plans to make offshore accounts more difficult to obtain is nothing more than protectionism and greed on the part of legislators. Furthermore, there is little evidence that fraud in conjunction with offshore accounts is any worse than fraud within the country. Therefore, there is no extraordinary reason to punish tax havens disproportionately, other than to take advantage of obtaining protected wealth.

Even the Pope has weighed in on global policy-making, citing the existence of tax havens as the main reason for the global economic crisis. The Pope is a good man, but an economist he is not. As a Catholic and a libertarian, it is troubling to see the Pope's misguided opinions lead him to recommend actions that could destroy the ability for people worldwide to legally maintain control over their private property. From a moral point of view, destroying the protections people legally and rightfully deserve, in particular when they are trying to keep their wealth from being seized by corrupt governments around the world, is wrong.

I think the parallel to maintaining sanctity of free speech is a good one. If someone abuses free speech by threatening another person, or by spreading libel, they should have their right to such speech removed. However, isolated cases of abuse are not grounds for abolishing free speech for everyone. Similarly, isolated cases of tax abuse deserve punishment, however, tax havens provide more benefit than they do detriment.

If you are unfamiliar with tax havens, I highly recommend this brief yet informative video series (I've embedded the video at the end of this post) by Dan Mitchell of the CATO Institute.

The Economic Case for Tax Havens
The Moral Case for Tax Havens
Tax Havens: Myths vs. Facts

He clarifies what tax havens are, their benefits, and highlights some of the current debate surrounding them. I found the video The Moral Case for Tax Havens to offer an incredibly compelling argument, as tax havens have been instrumental in allowing citizens and businesses in countries with corrupt governments or prohibitively high tax rates to maintain some semblance of control over their private property and move towards financial freedom. To take away tax havens would destroy many people's chances of ever finding prosperity.

I hope you take the time to learn the truth about this important topic, and how it could impact you and your business in the future.

The Economic Case for Tax Havens



The Moral Case for Tax Havens



Tax Havens: Myths vs. Facts