Why Tax Havens Are a Blessing

We live in a painful age of intentionally false images, hyped up "news" reporting, "facts" so distorted they are but lies -- and above all, an age of calculated political demagoguery in which our "leaders," both elected and self-appointed, habitually deal in double speak.

One of my literary heroes, the late George Orwell, aptly wrote: "During times of universal deceit, telling the truth becomes a revolutionary act."

We, at the Sovereign Society, have been following our revolutionary course for a decade now, telling the truth as we see it. Yet it is difficult at times to explain what is true in the face of massive popular ignorance and deliberately promoted prejudice.

Take, for example, the matter of tax havens -- those intelligent and prosperous jurisdictions across the world that levy little or no taxes on foreign business and investors. "When we think of tax havens, we tend to imagine yacht-besotted enclaves of shadowy international dilettantes, dripping with jewelry and laughing about the latest tax loophole their accountants have found. This popular image—and the fact that few of us have million-dollar private bank accounts in Monaco or Andorra—makes it all the easier for many to cheer [the anti-tax haven]... crusade. Why should the super wealthy get off the hook, the usual logic goes, while the rest of us pay our fair share? Yet the conventional wisdom could not be more wrong. We are all beneficiaries of tax havens in ways you might not expect."

Words of Wisdom

Those are the wise words of one of America's leading tax policy experts, Daniel J. Mitchell, senior fellow at the Cato Institute in Washington, writing in Foreign Policy magazine on March 18, 2008. He deftly describes the distorted views about tax havens American and other politicians constantly try to foist on an uninformed public.

The culprits include U.S. Senators Carl Levin (D-Mich) and (presidential wannabe), Barack Obama (D-Ill), who have joined in introduction of an inane bill that would disrupt U.S. trade and business by blacklisting thirty or so foreign jurisdictions for the manufactured sin of imposing little or no taxes.

Dan points out that: "We are all beneficiaries of tax havens in ways you might not expect" and he lists valid reasons:

1) Tax competition has lowered taxes everywhere. " Beginning with Reagan and Thatcher...governments have been racing to cut tax rates and reform tax regimes. Top personal tax rates now average only about 40 percent, and corporate rates have been reduced to an average of about 27 percent. It is largely globalization—not ideology—that has driven this virtuous "race to the bottom.""

2) The United States is the world's leading tax haven -- for foreigners only. "Thanks in part to these attractive policies, foreigners today have more than $12 trillion invested in the United States. Yet if [anti-tax haven] efforts are successful and all nations are saddled with the obligation to help enforce foreign tax laws, it is quite likely that a substantial share of that job-creating capital will flee the United States."

3) There is even a moral case for tax havens. "They play a critical role in protecting people who are subject to religious, ethnic, sexual, political, or racial persecution. Most of the world's population lives in regimes that have inadequate human-rights protections, and people with assets often are targets of oppressive governments. The ability to put money in a tax haven offers important protections for these potential victims." For a complete text of Dan's article, see http://www.cato.org/pub_display.php?pub_id=9283

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