Murphy goes through and refutes the typical arguments of the right wing in defense of tax havens.
Richard Murphy is Professor of Practice in International Political Economy, City University of London. He campaigns on issues of tax avoidance and tax evasion, as well as blogging at Tax Research UK
Cross-posted from Tax Research UK
Right wingers seem to think that criticisms of tax havens are an attack on so called ‘free market’ principles because they are one of the pillars of capitalism. This profound confusion on their part needs to be addressed. Tax havens are pillars of modern captialism: they are one of the main ones on which it is built, as I argue in ‘Dirty Secrets’. But let’s not pretend for a minute that they have any proper role to play in free markets.
Free markets, if they were to exist are dependent upon everyone having equal access to capital, the market and information. Unless that happens economic theory is quite explicit about the fact that, first of all, free markets do not exist and, second, abuse of markets is taking place.
And let me be clear: tax havens exist to make sure that there is unequal access to capital because the rich hide theirs away from view in these places.
And tax havens also exist to make sure competitors do not get access to markets, especially through the use of intellectual property rights which are so widely owned and controlled from thse places with the sole aim of suppressing fair competition.
And third, tax havens exist to ensure that markets do not have the information they need. We call them secrecy jurisdictions for a reason: it’s precisely because they exist to foil free markets.
There is, quite literally, not a person on earth who can defend tax havens because they promote free markets. That’s because their sole reason for existence is to undermine free markets, including distorting the level playing on tax which is another condition of free market existence.
But in that case the question as to why the right wing commentariat defend tax havens has to be asked. There are three answers.
First, they don’t like free markets: they instead like market exploitation. That is what modern capitalism is, after all, all about.
Second, they don’t like democracy, and tax havens do, of course, attack it by undermining the role of elected governments.
And third, they don’t like government services, so they try to undermine the related flows of tax.
These are the reasons why the right like tax havens. And they have to be called out for that.