MCViewPoint

Opinion from a Libertarian ViewPoint

The End of Tax Havens?

Posted by M. C. on August 17, 2022

by Jeff Thomas

So, to return to The Great Race by many governments today, what we are witnessing is a last-ditch effort to squeeze as much wealth as possible from their citizens before those governments run out of gas or, in this instance, run out of credit.

The image above is of a World War II German Panzer tank. So, what does that have to do with tax havens? I’ll get to that soon.

But first, let’s look at the Isle of Jersey, one of the islands in the English Channel. Most people think of it as a British tax haven, but it’s not, strictly speaking, a part of the UK and not a member of the EU. It’s a self-governing parliamentary democracy under a constitutional monarchy and has its own legal, judicial, and, most importantly, financial systems. For decades, it’s been a choice location for those who seek to avoid taxation.

Income tax was first created in England to pay for the Napoleonic Wars (maximum: 10%) and was raised in World War II to a maximum of 99.25%, again to pay for warfare. It was reduced after the war, but climbed again (on investment income over £20,000) to a maximum of 98% in 1974.

Jersey emerged as a tax haven as a result. Since Jersey was not obligated to pay tax to the UK, Britons increasingly deposited their wealth there.

It’s important to mention at this juncture that most of the world’s tax havens first sprouted as a result of similar situations – supply created in response to a clear need. Most people will abide low to moderate taxation but, whenever governments have become truly rapacious in taxing their people, those people have sought to escape enslavement from their own governments. Sometimes, this has meant physically leaving the country (as so many Britons did in the 70’s) and, sometimes, this has meant moving one’s money to a jurisdiction that has either low, or no, direct taxation.

Tax havens have a long history and, since the 70’s, as taxation in much of the world has been on the rise, havens have unsurprisingly flourished.

Not surprising, then, that the blowback from the most rapacious governments has grown. The Organisation for Economic Cooperation and Development (a euphemism if ever there was one), or OECD, has led the charge, funded primarily by the US but based in Paris and utilised heavily by the EU as well as the US.

See the rest here

Be seeing you

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