Leftists are thrilled with the Biden administration’s plan to leave the tax haven-less-tax jurisdiction where corporations and other investors can keep their money out of the hands of the government.
They will convince us that corporations are not paying their “fair share” of taxes – and that punishing these critics will benefit the world. In particular, Congressional Democrats are now pushing to restructure the tax system as a way to fund their .9 2.9 trillion welfare program.
“The administration’s strategy involves persuading other developed countries to adopt a global minimum tax for corporations, while companies currently stamping the benefits they get from booking their earnings in tax havens to rebuild the United States’ own tax code.” SlateJordan Weissman explained.
Some conservatives may support the redistribution effort as technology companies like Google, Facebook and Apple are in crosshairs. They should not be discouraged by the content control policies of those companies so that they can oppose them in the long run for tax increases. After all, corporations don’t actually pay taxes – only consumers and workers do.
Let’s deliver with anger about the tax haven. There is no fault in the companies and individuals who shelter their earnings from the government, like the organized masses who can never earn enough revenue. One has only to look at the US government’s $ 28 trillion-plus debt to realize that his spending desires are unsatisfactory.
If you believe that tax havens are unethical, you should not claim a waiver on your tax bill. President Joe Biden clearly thinks it is wrong for corporations to find low-tax headquarters in Bermuda, Ireland, and Switzerland, yet why is his Delaware House with so many U.S. corporate headquarters? Hint: It has nothing to do with the beautiful scenery around Wilmington.
California is a notorious high tax state. In our federalist system, each state can create its own tax policy, which is why many corporations are moving toward friendly weather like Texas and Utah. Such competition is a strength of the American approach. Similar processes work internationally.
Tax havens put pressure on high-cost governments to limit tax rates, and lower tax rates boost economic activity, create jobs and encourage investors to invest more. As economist Milton Friedman puts it, “The competition between national governments for the government services they provide and the taxes they impose is as productive as the competition between individuals or enterprises for the products and services offered for the sale of each product or service.”
Governments propose these anti-tax rules only to protect companies from tax evasion, thus allowing them to spend with taxes and rebates. The main reason tax shelters are getting better is because they help corporations protect their money from the U.S. government, which already has a lot of revenue (and debt) – and needs to learn to spend it more efficiently.
In practical terms, the principles that undermine tax havens are the opposite. A prominent 2018 study by Juan Carlos Suarez Serrato, a professor at Duke University, found that an IRS rule increased the corporate tax rates for US-based multinationals, adversely affecting their domestic investment and employment.
Also in a practical note, “Offshore centers allow companies and investment funds to operate internationally without complying with a variety of regulations and often pay more taxes than they are entitled to,” noted Philip Booth of the Institute for Economic Affairs. “They make it possible for businesses to avoid larger government exaggerations and crazy tax systems.”
In addition, the biden plan would increase taxes on reinsurance companies – which insurers provide insurance to other insurance companies – which would reduce the number of readily available insurance policies and increase rates on consumers.
Progressives argue that tax havens allow criminal organizations to hide their ill-gotten gains, but Daniel Mitchell of the libertarian Kato Institute (who deserves a hat-trick for quoting Friedman) explains that “the most comprehensive analysis of dirty money finds 28 problems. Only one can be considered a tax haven. “
And he added that tax havens allow people living in oppressive regimes (such as Jews in some Middle Eastern countries and dissidents in Venezuela or Cuba) to “invest their wealth off the coast and keep that information secret from the Venetian government.”
Looking at how the U.S. government spends its money, it’s hard to take seriously the claims of tax-haven enemies like Oxfam International: “Big business is evading taxes on an industrial scale, depriving governments worldwide of their money. Poverty must be eradicated and health care, education.” And you have to invest in jobs. “
Please. If poverty alleviation was a task the size of a government tax collection, America (and especially California) would have solved that problem decades ago. Those who oppose the tax haven just want the government to take more money and get more power. That’s why I celebrate the wonder of Offshore Haven.
This column was first published in The Orange County Register.