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CF&P Foundation Press Release

Center for Freedom and Prosperity Foundation

For Immediate Release
Wednesday, May 9, 2007
202-285-0244
www.freedomandprosperity.org

Study Documents the Beneficial Role of Low-Tax Jurisdictions in the Global Economy
~
Debunks Tax Haven Myths ~

(Washington, DC, Wednesday, May 9, 2007) -- The Center for Freedom and Prosperity Foundation today released a study puncturing some of the myths surrounding tax havens and their role in the global economy. The study, entitled "Tax Havens: Myth Versus Reality," is a user-friendly resource for taxpayers, lawmakers, policy makers and journalists seeking an accurate assessment and description of these low-tax jurisdictions. 

Link:  http://www.freedomandprosperity.org/Papers/th-myths/th-myths.shtml

The paper finds that "so-called tax havens are routinely vilified, largely because they are perceived as a threat by politicians, leftist organizations, and other advocates of bigger government and high tax rates. In almost all cases, however, attacks on these low-tax jurisdictions are either baseless or distorted."

"The study is a tutorial for policy makers interested in learning the truth about so-called tax havens," said Andrew Quinlan president of the CF&P Foundation.  "With anti-market Senators in Washington and European bureaucrats advocating anti-tax haven legislation, this study is a much needed antidote to demagoguery," added Quinlan

The paper dispels some of the myths being propagated by opponents of low-tax jurisdictions and provides useful information about the real issues.

  • There is not a significant "offshore evasion" problem.
  • Financial privacy plays a key role in protecting human rights.
  • OECD hypocrisy.
  • The US benefits from tax competition.
  • International bureaucracies have no moral authority to interfere with national tax laws.
  • Fiscal sovereignty is at stake.
  • We should mimic tax havens, not persecute them.
  • The problem is high tax rates.
  • The OECD tax agenda is completely inconsistent with tax reform.
  • Tax competition should be celebrated, not persecuted.
  • So-called tax havens are less likely to engage in money laundering according to international experts and U.S. government agencies.

Link: Tax Havens: Myth Versus Reality
http://www.freedomandprosperity.org/Papers/th-myths/th-myths.shtml

Daniel Mitchell of the Cato Institute, the author of the study, added, "Politicians generally are expected to bend the truth, but anti-tax haven lawmakers fail to meet even elementary standards of honesty and accuracy. The paper is designed for those who want straightforward information about the role of low-tax jurisdictions."

Veronique de Rugy, the Mercatus Center commented, "Anti-tax haven demagoguery is motivated by a desire to hinder tax competition and create an 'OPEC for politicians.' Lawmakers who want bigger government should not be allowed to disrupt to the global economy."

Executive Summary

So-called tax havens are routinely vilified, largely because they are perceived as a threat by politicians, leftist organizations, and other advocates of bigger government and high tax rates. In almost all cases, however, attacks on these low-tax jurisdictions are either baseless or distorted.

Surprisingly, anti-tax haven demagogues generally are unable to even correctly identify the characteristics that make a jurisdiction a "haven." Is it low taxes? Zero taxes? Financial privacy laws? Incorporation laws that do not require ownership information? The existence of bearer shares? And even the critics that use a more carefully tailored definition i.e., a jurisdiction that exercises its sovereign right to not enforce the tax laws of another nation often engage in discrimination when listing the world's tax havens.

The United States, for instance, is a tax haven. Foreigners can and do put money in the U.S. and earn interest and capital gains without any obligation to pay tax to the IRS and without being reported to their governments. Many states allow foreigners to set up corporations without disclosing ownership information. Some even allow bearer shares. These policies have helped attract trillions of dollars to the U.S. economy, yet critics of tax havens fail perhaps deliberately to note how any campaign against tax havens unambiguously can boomerang against America's self interest.

Critics also ignore how tax havens provide confidentiality to ethnic, religious, racial, sexual, and political minorities, a critical role since the majority of the world's population lives in nations have less-than-stellar attitudes toward human rights. Likewise, tax havens also are a refuge for people in nations suffering from crime, extortion, and corruption.

Tax haven opponents routinely rely on shoddy numbers, ignore academic evidence, and engage in smear campaigns. Public policy, however, should not be based in mistruths and stereotypes fostered in novels and movies. And public policy certainly should not be based on politicians in high-tax nations persecuting nations trying to prop up their inefficient welfare states by engaging in anti-globalization policies.

Link to paper:
http://www.freedomandprosperity.org/Papers/th-myths/th-myths.shtml

PDF version of paper:
http://www.freedomandprosperity.org/Papers/th-myths/th-myths.pdf

 

For additional comments:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
Dan Mitchell can be reached at 202-218-4615, dmitchell@cato.org
Veronique de Rugy can be reached at 703-993-4930, vderugy@gmu.edu
 

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