How To End Tax Havens? One Idea

I’m not crazy about the idea of wealthy people and corporations avoiding taxes by creating subsidiaries with no economic function in tax havens.  Sometimes I wonder if the budgets could be balanced if we were able to eliminate the tax havens.

How To End Tax Havens? One Idea

So, why not have a meeting of NATO of the G-20, or even the Useless United Nations, and discuss a common strategy of dealing with rogue nations/city-states that invite people and corporations to do business through them in order to avoid taxes.

One strategy could be this: use NATO to blockade these places, and tell them to end their tax-avoidance-facilitation policies, or else.

Now that ‘s a little harsh, but almost all of the tax havens with the exception of Ireland are little places that can’t defend themselves.  But maybe there is an alternative.

The coalition of the willing would go to each of the tax havens, and make a deal with them.  “If you raise your tax rates and definition of income to our levels, we will remit foreign aid to you to partially compensate you for your loss.  Remember, we can use military or economic sanctions against you — think of Iran, or North Korea.”

Why it won’t Happen

The main reason it won’t happen is that wealthy supporters of politicians will complain, and many politicians are wealthy themselves.  Sad, but true, and it will remain so until a significant nation nears default.

By David Merkel, CFA of alephblog