Stash Your Cash Overseas Help the Local Economy
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I found this story in the Financial Times to be pretty interesting:
Offshore financial centres have a beneficial economic impact on neighbouring industrialised countries, according to a study commissioned in a bid to counter growing political pressure on tax havens.
The study said “a large body of economic research over the last 15 years” contradicted the popular view that offshore centres erode tax collections, divert economic activity and otherwise burden nearby high-tax countries.
The study was commissioned by STEP, a London-based professional body for wealth advisers, who make extensive use of offshore jurisdictions. It was published in advance of this weekend’s G20 meeting in St Andrews, where political leaders are set to discuss how to help developing countries secure the benefits of exchanging tax information.
A report to the Treasury, published last week, cited similar research showing that foreign investors were able to lower the “hurdle rate” required to invest in high tax jurisdictions by using nearby tax havens. It said “the UK might be overall better off with them [Crown Dependencies and Overseas Territories] in place on the grounds that their existence allows more investment to flow to the UK than would otherwise be the case”.
Professor James Hines of the University of Michigan, the author of the STEP study, said tax havens “play the important role of pressure valves”, allowing big countries to impose higher taxes on domestic businesses without deterring international investors or triggering “beggar thy neighbour” tax competition.
For every 1 per cent more investment by a US business in a tax haven, there is 0.5-0.7 per cent more sales and investment growth in neighbouring industrialised countries, the study said. Similar results had been drawn from studies of European businesses and those elsewhere, including developing countries.
Prof Hines said his arguments were the “prevailing orthodoxy” among US economists. But Professor Joel Slemrod, another University of Michigan expert on tax havens, has argued they are “parasitic” on the revenues of bigger countries and the abolition of some of the larger ones would leave all countries better off.
The findings are likely to be disputed by groups such as Tax Justice Network, which argues that havens undermine markets, promote crime and threaten democracy by encouraging tax competition.
The study also said offshore centres played a “key role” in the international financial system, improving the availability of credit and encouraging competition in domestic banking.
Hmm… so it seems as though if governments try and squeeze every bit of wealth out of people who earned it then the citizens will have less money to use as they want… such as investing and starting businesses in the countries in which they live.
Gee… imagine that, allowing the wealthy to keep some of their money so they can re-invest it thus benefitting many people. What a strange concept!
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9:46 AM
As a moderate republican, I believe in smaller government, but somehow the new republican party has forgotten what smaller is, or what is the role of government. A war on terror costing 100′s of billions of dollars, and takes away my privacy, in order to defeat terrorists who were armed with box cutters. A common sense lockable entry into the pilot’s compartment would have avoided this whole mess. Two wars of choice. One we never knew the real reason why it was launched. The other we will never know when we have succeeded in our mission. Senator Taft (1950) was right. The last “good war” was WWII, because we knew what we were fighting for, and everybody shared in the sacrifice. As the tragedy at Fort Hood proved, what are we doing to those brave men and women who sacrifice their all for us? They go back to a war zone two, three, four times, and have a increasingly high rate of mental illness. When will their mission be accomplished? If there was a Draft would we be fighting these wars?
The mixing of church and state, going into my bedroom, and telling my wife what she can and can’t do with her body. Even I can’t do that and Thomas Jefferson would never approve of this. America was founded because we have a right to privacy and the right to be to be secure in our own homes. While I do not have the responsibility to pay for private elective medical procedures that I consider immoral, I do not have the right to interfere with the private choices of others, which do not involve the government.
Huge multi-national corporations have the rights of an individual, and effect my life more than the government ever has. Yet they are too big to fail, and I pay to bail them out. Small retailers can not compete with Wal-mart, who is so big they get special deals from Chinese companies which are unavailable to others. Wall Street enriches itself with actions that destroys peoples lives and the economy. Yet, my party tells me they can not be regulated and controlled by the only institution which can match them in size, wealth, and power. The only proper role of Government is to do what we as individuals can not do for ourselves. We do not live in a capitalist society, we live in a corporate society, with the rich getting richer, the poor struggling to survive, and the middle class disappearing as they join the ranks of the poor. The former abuses of government are are greatly overshadowed, by these corporations which have no loyalty to any country, or people.
7:21 PM
“Charles” or whatever his name is posted the exact same comment on another website:
http://www.commentsonnationalamnesia.com/2009/11/06/3791/#comments
I think you’re a little off base here.
The GOP has “forgotten” about smaller government, particularly under George W. Bush. With this I can agree. However except for WWII every war since has been a “war of choice.” This in itself doesn’t mean anything. One could argue unless another government directly attacks the U.S. everything we do is “of choice” (and technically even then our response to Pearl Harbor was “of choice”). I don’t think that’s a very good definition by which to go.
I’m not sure what you mean about “church and state going into” your bedroom. The U.S. is more secular now than it has ever been. America was also founded as a Christian nation, this fact cannot be refuted even if many of the Founding Fathers were Deists they still believed we were a nation given special attributes by God.
Multi-nation corporations may not be perfect but thanks to them we have energy, a robust food supply, technology, and toilet paper is in the stores. There were no corporations in the USSR and there aren’t any in North Korea and many other places around the world and the standard of living in very poor indeed.
Most of the rich are so because of their habits and lifestlye while most of the poor are that way for the same reasons. There are exceptions but the people I’ve known who work hard and smart do well, those who do not sink.
You have more opportunities, for now, living in the U.S. than in any other nation or place on Earth today or on any nation or place that ever existed in human society.
10:04 PM
I don’t understand the populist angst against corporations. Corporations are a logical side product of a free, democratic society. The difference between a corporation and the government is that ultimately a corporation must create something of value for the rest of society. A corporation can only grow as large and as powerful as the will of the people will allow. Wall Street bankers wouldn’t have become so important or wealthy if it weren’t for millions of stupid Americans overleveraging themselves to buy things they couldn’t afford. Ultimately, corporations cannot confiscate our wealth from us like a government can. To complain about corporations, is like looking in the mirror, deciding you are ugly, and then blaming the mirror. The nature of modern American corporations isn’t a cause of problems as much as a symptom of some the inherent cultural problems.
.-= burro´s last blog ..Another Messiah in the Making =-.
10:58 PM
Gosh, burro, that’s not what I read in last week’s edition of Newsweek that I found in at the bus station. Since I read it in a magazine it must be true.