How Tax Havens Help Us All

MH photo

Tax havens reduce poverty and help average and below income earners, argues Mark Hornshaw:

Tax is the price we pay for failing to build a civilised society. The greater the level of taxation, the greater the degree to which the brute force of confiscation has supplanted voluntary and peaceful interaction. So from that point of view, a tax haven is like a safe house, a Sherwood Forest, so to speak, where honest people can band together to shield themselves from the depredations of the greedy Prince and his cronies (see note below).

If you want to be a bit softer on governments than that, then tax havens can be seen as interjurisdictional tax competition. If governments want to attract businesses to set up headquarters in their territory, some may boast a nice climate, or an educated workforce, or an enclave of high tech suppliers and partners. But the governments of some smaller and poorer nations can offer none of those, and can only ‘compete on price’ in the form of lower taxes. By supporting tax havens, global companies are helping to close the gap between rich countries and developing countries. Meanwhile those who oppose tax havens are attempting to cartelise the tax collecting powers of large nations, by thuggishly forcing out the competition from smaller nations.

But for the average tax payer, that all seems a bit aloof and moralistic. You might be thinking “surely tax havens only serve rich people and big corporations, so why should I be concerned?”

Well I would argue that average or below average income earners benefit a lot more from tax havens than most people realise. Continue reading