Tax Havens Should Be Celebrated, Not Persecuted

Politicians from high-tax nations, working through international bureaucracies such as the Paris-based Organization for Economic Cooperation and Development, are trying to undermine tax competition by persecuting so-called tax havens. Treasury Secretary Timothy Geithner recently testified that the Obama administration intends to push legislation to penalize Americans who utilize these jurisdictions. European politicians, meanwhile, have announced that they want to use the upcoming G-20 Summit to launch an attack on low-tax jurisdictions. Governments do not like tax havens because it is more difficult to enforce oppressive tax laws in a globalized economy. Any assault against tax havens, however, would be bad news for the global economy. Without the pressure of tax competition, politicians would raise tax rates, wiping out many of the pro-growth reforms of recent decades. Such a campaign would also undermine the U.S. economy, both because the United States is a tax haven for foreign capital and because most major "offshore" centers are conduits for investment in the American economy. To learn more about these issues, please join Cato scholar Dan Mitchell and former member of the Cayman Islands Monetary Authority Richard Rahn to review the myths and realities about the role of tax havens in the global economy.