In defence of tax havens (and why we should be one)

****

I have this mental image of rich folk in tax havens. It’s the mental image that the people who don’t approve of tax havens want you to have – slightly foreign-looking men hunched over piles of filthy lucre smirking as they count it or slightly overweight blokes in badly co-ordinated clothes lighting cigars with $100 notes. We might summon up a scene by the pool as portly plutocrats frolic with blonde bimbos laughing all the while at their ill-gotten gains.

It is clear that these tax haven denizens are the lowest of the low prepared to leave the ordinary people of their homeland in Dickensian squalor while they live in the lap of (rather poor taste) luxury. And – according to so self-appointed experts – this is $21 trillion’s worth of luxury’s lap. How dare they!

This selfish act – shifting the cash to a place where it’s not a risk of confiscation – is the 21^st century’s most monstrous evil. It’s not their money – it is taxes.

These estimates reveal a staggering failure," says John Christensen of the Tax Justice Network. "Inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people.

"This new data shows the exact opposite has happened: for three decades extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich."

Well actually “this data” shows nothing of the sort. What the data shows is threefold:

1. The people in charge of undemocratic, autocratic regimes in the developing world have shifted their cash (whether or not it is ill-gotten) to places where it’s safe. This isn’t about tax avoidance – one of the features of developing countries is their inability to raise taxes (which, by the way, is why over a third of Uganda’s national budget is overseas aid). It’s about ensuring that most of the cash stays in the family and isn’t lifted by the next generation of kleptocrats. According to the Guardian’s jolly infogram just 20 developing countries account for $7.5 trillion of the stashed cash.
2. The second problem is that no distinction is made between income and assets. Most places don’t tax assets so it’s perfectly possible for a lot of this cash to have already been taxed. Perhaps not at the confiscatory rates prefers by Guardian readers but taxed nonetheless. And the implication (a pretty daft one if you ask me) is that all this money is held as cash. And that it’s stored in a big vault in the manner of Scrooge McDuck. Forgive me for thinking that most of these bloated capitalist billionaires would prefer that their cash did some work for them while stashed away avoiding tax? Which means it’s generating more wealth and (as a by-product) creating jobs, supporting businesses and generally doing that good stuff that money well-used – note this you wasteful governments – does.
3.  Finally, no-one spots the other part of the problem – tax rates on income are too high. This isn’t just the moral offence of taking half of what someone works to earn. It’s much more practical than that – if, as a result of our tax regimes or other confiscatory laws, rich people bundle up their cash and stick it somewhere else, then it’s our tax system that is the problem rather than the “ethics” of the rich people.

I like tax havens. They help – or should help – keep governments honest in matters of tax.  More importantly these places attract billions (trillions even) of lovely pounds, dollars, euros and yen. Wouldn’t you rather that all this money was being managed from your country instead of sitting in Switzerland, Jersey or the Seychelles making those places filthy rich?

The solution is really simple – institute privacy protection on personal assets and set the tax rates on income and capital gains at a lower level. Do this and watch the money pour into your coffers where it can be reinvested in new business, creating wealth and, by these acts, jobs and income for the poor in their Dickensian squalor.

...

Richard and The Money Tree: Part 2 - in which he seeks support for his quest

****

The sun shone on the city. The little blue birds twittered and tweeted, their voices cheering Richard as he headed for the Place of Tents.

“How could those Economists not see the truth of what he was saying,” said Richard speaking his thoughts aloud to the tweeting birds, “how could they not see the truth of the money tree.”

The little blue tweeting birds carried these thoughts far and wide so that, by the time the Great Temple (in whose shadow lay the Place of Tents) loomed into Richard’s sight, the Students of Uncut and others among the Occupiers already knew of Richard’s fight against the Economists and the evil of their neoliberalism.

On arrival Richard was feted as a hero.

“We shall support your quest for the Havens of the Money Tree," was the cry from Caroline, a green fairy visiting the Place of Tents, “I have a perch in the Palace of the King’s Men and shall take your message there.”

The Students of Uncut told Richard their tale – the story of solo and the ninety-nine. Richard listened and heard of how Vo de Ffon, who sends messages, and Phil of the Green, a shopkeeper, had stolen the money tree and taken it to a Haven between the sea and the mountains. And that this was our money tree but that the King’s Men had still allowed Vo and Phil to keep the tree with all its money.

“Our search for the money tree continues,” cried Richard, “this Haven - a place of fast chariots, gambling and other sins – must be torn down and the money trees returned to their rightful lands.”

The Students of Uncut and other occupiers of the Place of Tents cheered Richard and urged him onwards in his quest. Alone in the city, these noble souls saw that Richard truly was the Courageous One!

“Richard, you must take what you have found to the King’s Men,” cried the Students, “not all of them are yet corrupted by neoliberalism and the glitter of greed.  Some will help you find the money tree!”

“First,” said Richard, “I shall visit the Guilds of Tradesmen – those working men have been robbed by Vo de Ffon, Phil of the Green and the King’s Men. They will help in our quest.”

So, refreshed by the great support from the Students of Uncut, the Green Fairies and other Occupiers at the Place of Tents, Richard set off across the city heading for the Guilds of Tradesmen. He knew that Bob the Crow, Bren the Barber and others who lead those slaving in the King’s Men’s mines and plantations would take up the quest.

....

Although they were just workers, the Guilds of Tradesmen dwelled in a building just as grand as that of the Economists with long sweeping staircases, liveried flunkies and cavernous, bejewelled halls. The dined on the finest foods, drank the best wine and dressed in splendid, hand-made (if a little ill-fitting) suits. 

Richard knew this to be right – how could Bob, Bren and the other leaders battle the evil of the King’s Men on just the pittance allowed to the workers in the mines and plantations.

Richard told the story of the money tree to the leaders of the Guilds of Tradesmen who listened with, Richard could see, growing anger to the tale of how the King’s Men allowed Vo de Ffon, Phil of the Green and others to steal money trees from the people to whom they belonged.

“I’ll stop all the carriages," cried Bob the Crow, “we will bring the city to a halt. It is an outrage that the King’s Men should rob us in this manner!”

“Aye," said Bren, “those slaving in the mines and on the fields will take to the streets. We will storm the Palace of the King’s Men and demand that they return the money tree from Vo de Ffon and Phil of the Green. That they tear down the Haven of the Fast Chariots.”

A new voice was heard from the doorway, “I command the men who carry the paper for the King’s Men, who co-ordinate diversity and who care like nanny for those who smoke and drink. We shall join your righteous campaign; we too shall seek the money tree! The money tree that is our members’ rightful inheritance!”

It was Dave the Apprentice – a welcome and strong addition to Richard’s quest. The money tree was almost within grasp. Surely, with such a force for good, the King’s Men must reveal the truth about the money tree – a truth so cruelly hidden until Richard had uncovered its secret.

“I hear that Gideon of Tatton, the most evil of the King’s Men, denied the existence of the money tree,” explained Dave the Apprentice, “we have parchments received from the leaders of other lands who have joined the quest and who support Robin Hood – yet still Gideon refuses to reveal the truth.”

“I will go to the Palace of the King’s Men,” said Richard, “there, Caroline, the Green Fairy and others she will find to aid us will tell the truth before all men. There is a money tree that was stolen by Vo de Ffon and Phil of the Green – a money tree that could ease all the worries of the people. That money tree is in the Haven of the Fast Chariots and the leaders of many lands want it released. Only Gideon of Tatton

With these words, Richard headed off to the Palace of the King’s Men, there to tell the truth, to show where thieves had hidden the money tree. And to bring that tree back to the people so their suffering can end!

...

Let Britain be a tax haven too then!

The Swale and Kent Marshes from Harty Ferry

It won't come as a secret to you, dear reader, that I am not especially keen on paying taxes. Not that I'm alone in all this - people out there seem a great deal keener on getting others to pay more tax than they are on handing their own cash over to our wonderful government. For sure, while Her Majesty's Revenue & Customs will cheerfully take any available cash from whatever source, the advocates of higher corporate taxes are noticeably handing over extra so as to help out the poor (who aren't out on those picket lines).

Today however a new front was opened up in the Great Battle to Get Other People to Pay More Tax - Switzerland! Here's a taster:

The key point here is that tax avoidance by big multinationals is just a part – albeit a very important part – of a bigger and even nastier picture: tax havens and the global offshore system. This is massive. Tax havens and offshore finance have been metastatising (sic) through the global economy since the 1970s: the unseen component of financial globalisation. They lie at the heart of the global economy. Half of all world trade passes through tax havens.


This is not about a few celebrity tax-dodgers, spivs and mafiosi: as UK Uncut has recognised, this is also about multinational corporations – and, most importantly, about banks. Recently the Mail on Sunday found that Barclays, Lloyds and RBS have over 550 tax haven subsidiaries between them.

What I understand from this differs from the conclusions of the author - who sees the avoiding of tax as a great evil. I see the situation as a call to action for our government - demonstrating the need to make taxes simpler and to reduce them. For Britain to "suck in" all that international capital finance and put it to work building a great country founded on the idea of free exchange and willing participation in the task of governing. A place where someones success is reason for celebration not condemnation, where envy is no longer the driver of political action and where taxes do not punish or penalise.

I want Britain to be a tax haven!

....