Should governments destroy tax havens?

The Associated Press

Lovely Lichtenstein is a haven for tax evaders.

Featured Topic | Posted 36 weeks 3 days ago

Should governments destroy tax havens?

Little Lichtenstein is a great country in which to avoid paying taxes. It's a tax haven -- a place where foreigners claim residency to skirt paying high taxes back home. Bermuda and the Cayman Islands are tax havens, too. Naturally, the European Union, the United States and other revenue-hungry governments are doing everything they can to root out tax evaders and collect the tax.

But Lichtenstein's rulers say they are just offering a valuable service in a competetive global marketplace.

Are tax havens unfair? Should the U.S. do more to root out tax dodgers and punish countries that provide tax havens? Or do the economic benefits of tax havens outweigh the costs?

Ben likes: Why tax havens are a blessing

Daniel J. Mitchell/Foreign Policy

Tax competition is driving tax policy in the right direction, and tax havens play a key role in this liberalizing process. High-tax countries complain that jurisdictions such as Liechtenstein enable tax evasion, but this sidesteps the obvious point that lower tax rates and tax reform are a much better way to reduce evasion. The truth is, those crusading against tax havens would cost us all much more than tiny little Liechtenstein ever could.

Joel likes: Liechtenstein's friendly bankers

New York Times

Not surprisingly, Liechtenstein’s leaders have focused all of their indignation on the theft of confidential data. “Fiscal interests cannot be placed ahead of the rule of law,” fumed Prince Alois. We are not encouraging anyone to steal data. But who is putting fiscal interests ahead of the rule of law here? That’s what providing a secret haven for other countries’ tax evaders is, and Germany is right to crack down.

Liechtenstein and its fellow havens need to start showing some real cooperation in fighting fraud, money laundering and tax evasion. In the modern world, that is how countries, and leaders, earn respect and influence.