A cursory glance at the World’s leading tax havens illustrates the hypocrisy of politicians getting wound up about the revelations in the recently released Paradise Papers and the Panama Papers before them. Many of the havens are within the direct legislative jurisdiction of nations such as the US (which is itself a tax haven) and the UK, for example. And we should not forget that Luxembourg, Switzerland are key European homes of tax avoidance. Remember that the current President of the European Commission “spent years in his previous role as Luxembourg’s prime minister secretly blocking EU efforts to tackle tax avoidance by multinational corporations” (Source) ably supported by the Netherlands, another nation engaged in the practice. If the politicians were truly worried about this issue they could do something about it directly with the stroke of a legislative pen. Britain could, for example, eliminate Jersey, the Isle of Man, and its Overseas Territories from this corporate scam. The US could do similarly. The EU could bring in new rules to stop Luxembourg. But they don’t stop it, which tells you everything. But, the problem of tax avoidance and evasion is not fiscal. Progressives get stuck on that point. It is largely irrelevant. The real issues are inequality, power and macroeconomic stability. That is what this blog is about....Bill Mitchell – billy blog
What matters about the Paradise Papers
Bill Mitchell | Professor in Economics, University of Newcastle, New South Wales, and Director of the Centre of Full Employment and Equity (CofFEE)
Never have understood the whole notion that tax reform for the wealthy is necessary to get them to bring their money back. Having your money in a US bank vs a bank in Switzerland or the Caribbean doesn't make you any more likely to spend that money. One can just as easily make a purchase form their Swiss bank account as any other account.
ReplyDeleteAdditionally, as I understand it, if your holdings are in US$, no matter what bank they are in the Fed knows of them, can track them and can tax them if they want.
If the holdings aren't in US$ then we shouldn't be concerned with them.
The only entity that would benefit from someone moving trillions of dollars from a foreign bank to a US bank would be the US bank itself....... big deal. That is no reason to worry about savings in a foreign bank
Economically, saving functions like a tax. It neutralizes money from spending for those whose propensity to save is high, which is characteristic of the wealthy. So from the macro standpoint, it is pretty meaningless.
ReplyDeleteBut that is not all there is to the matters. In addition there are many social and political factors in play,
Moreover, wealth does imparts economic power in addition to social and political power, and power is distorting economically, especially when contemporary capitalism is mostly revolves around economic rent.
But if they use that munnie/power to do stupid things then it doesn’t matter if they have all that munnie or not...
ReplyDeleteiow the problem isn’t the munnie the problem is the stupid....
ReplyDeleteIf they didn't have the money they couldn't do stupid things with it. Duh.
ReplyDeleteif your holdings are in US$, no matter what bank they are in the Fed knows of them, Greg
ReplyDeleteDollars exist in only two forms, physical dollars, aka "cash", and account balances at the Federal Reserve, so dollars, except for normally petty amounts of vault cash, are not stored in banks.
That makes taxing dollars simple, except for physical dollars, just levy negative interest on private account balances at the Federal Reserve, beyond a say, $250,000 individual US citizen exemption.
And who says banks and other large account holders at the Fed should not have to pay for risk-free storage of their dollars? Instead of being PAID(!) (interest on reserves) to do so?