4 ms·

I never understood why countries do not impose huge taxes on money moving in and out of tax havens. I guess there is always another route you can take to disgui

I never understood why countries do not impose huge taxes on money moving in and out of tax havens. I guess there is always another route you can take to disguise the origin.

song 11y ago
Some countries do that. For example in Portugal the yearly tax on real estate is around 0.3% of the price of the house/apartment but if the owner is a country based in a tax haven (and that include countries in the Grey area like Hong Kong), then the tax rate is 7.5%.
briandear 11y ago
Why? The money doesn't belong to the government. The problem is that taxes are too high. Lower taxes and there's no need for havens.
- vkou 11y ago
  In the tax avoidance game, any amount of taxes is too high. Your advice will take the rates right down to zero.
- s73v3r 11y ago
  You could cut the taxes in half, and they'd still seek out tax havens. Don't capitulate to their demands. Cut off the ability send money to the tax havens.
- anigbrowl 11y ago
  You park your capital somewhere because you like the commercial, legal and financial infrastructure. Insofar as your financial mass distorts economic spacetime for everyone int eh vicinity, it's not unreasonable that you will be asked to pay some of the costs of said distortion. If you stay in a hotel that's only half-full and make your bed before you check out, would you expect your stay to be free? Probably not. I'm being a bit tongue-in-cheek here, but your repeated claims that taxes are too high presupposes some objectively correct level of taxation. In the real world, what happens is that tiny poor jurisdictions set tax rates that would be economically unsustainable but for the prospect of attracting some huge international firm whose revenues are so big that even a tiny percentage of them is a lot of money for the poor jurisdiction, and the extra administrative costs of domiciling the corporation there are less than the difference between the unusually low tax rate and that of a more economically logical place for the headquarters, based on actual factors of production. Why should taxes come down to the level of whatever the poorest country is willing to charge in order to attract itinerant capital? Why not (as we are sort-of in the process of doing) just deny market access to firms that don't want to pay prevailing rates? It's not that I hate capital as such, but as an individual I have to pay some sort of taxes and my international economic movements are somewhat restricted, because of the basic fact that people can impose costs on an economy as well as contribute to it. I'm not enthused about paying taxes on the income I receive in return for my work product, but I recognize that there's a quid pro quo here as I prefer to live in a civilized society and transact business using money rather than live in a cave and subsist on fish or something. I don't care for the idea that having a large sum of capital should exempt one from these rules, in addition to the obvious economic advantages that said capital provides (and which I slightly envy but do not resent).
charlesdm 11y ago
Freedom of capital, mostly. Also, there are valid reasons to bank outside your native country. The wealthier you are, the less location matters, and the more reasons you might have to bank "offshore" (or at least outside your native country). An example: a friend who often travels to the UK asked his local bank if he could get a GBP denominated credit card (+ settle it in GBP). Wasn't possible. He opened an account in Jersey (or Guernsey, can't remember), where this wasn't a problem.
tim333 11y ago
>why countries do not impose huge taxes on money moving in and out of tax havens It doesn't really make the counties any more prosperous. Firstly you can't really just ban tax havens because then people would move money to countries that are not havens but just happen to have lower taxes in some area (eg. Ireland for corporate tax, Belgium for cgt). Then if you restrict money going in, outside investors are wary of bringing any money in. So you kind of end up like the UK in the 70s when they had exchange controls, high unemployment, strikes etc. There are smarter ways to stop offshore avoidance. Usually enforcing the existing laws more thoroughly which is partly what's happening to Jersey - I have a Jersey bank account and get occasional letters about how they are being forced to declare it to the EU/UK tax authorities.
gozur88 11y ago
They want the money. Why would the UK impose huge taxes on money from, say, the US? They would just lose it to Zurich or Monaco.

I never understood why countries do not impose huge taxes on money moving in and out of tax havens. I guess there is always another route you can take to disguise the origin.

song 11y ago

Some countries do that. For example in Portugal the yearly tax on real estate is around 0.3% of the price of the house/apartment but if the owner is a country based in a tax haven (and that include countries in the Grey area like Hong Kong), then the tax rate is 7.5%.

briandear 11y ago

Why? The money doesn't belong to the government. The problem is that taxes are too high. Lower taxes and there's no need for havens.

vkou 11y ago
In the tax avoidance game, any amount of taxes is too high. Your advice will take the rates right down to zero.
s73v3r 11y ago
You could cut the taxes in half, and they'd still seek out tax havens. Don't capitulate to their demands. Cut off the ability send money to the tax havens.
anigbrowl 11y ago
You park your capital somewhere because you like the commercial, legal and financial infrastructure. Insofar as your financial mass distorts economic spacetime for everyone int eh vicinity, it's not unreasonable that you will be asked to pay some of the costs of said distortion. If you stay in a hotel that's only half-full and make your bed before you check out, would you expect your stay to be free? Probably not. I'm being a bit tongue-in-cheek here, but your repeated claims that taxes are too high presupposes some objectively correct level of taxation. In the real world, what happens is that tiny poor jurisdictions set tax rates that would be economically unsustainable but for the prospect of attracting some huge international firm whose revenues are so big that even a tiny percentage of them is a lot of money for the poor jurisdiction, and the extra administrative costs of domiciling the corporation there are less than the difference between the unusually low tax rate and that of a more economically logical place for the headquarters, based on actual factors of production. Why should taxes come down to the level of whatever the poorest country is willing to charge in order to attract itinerant capital? Why not (as we are sort-of in the process of doing) just deny market access to firms that don't want to pay prevailing rates? It's not that I hate capital as such, but as an individual I have to pay some sort of taxes and my international economic movements are somewhat restricted, because of the basic fact that people can impose costs on an economy as well as contribute to it. I'm not enthused about paying taxes on the income I receive in return for my work product, but I recognize that there's a quid pro quo here as I prefer to live in a civilized society and transact business using money rather than live in a cave and subsist on fish or something. I don't care for the idea that having a large sum of capital should exempt one from these rules, in addition to the obvious economic advantages that said capital provides (and which I slightly envy but do not resent).

charlesdm 11y ago

Freedom of capital, mostly. Also, there are valid reasons to bank outside your native country. The wealthier you are, the less location matters, and the more reasons you might have to bank "offshore" (or at least outside your native country). An example: a friend who often travels to the UK asked his local bank if he could get a GBP denominated credit card (+ settle it in GBP). Wasn't possible. He opened an account in Jersey (or Guernsey, can't remember), where this wasn't a problem.

tim333 11y ago

>why countries do not impose huge taxes on money moving in and out of tax havens It doesn't really make the counties any more prosperous. Firstly you can't really just ban tax havens because then people would move money to countries that are not havens but just happen to have lower taxes in some area (eg. Ireland for corporate tax, Belgium for cgt). Then if you restrict money going in, outside investors are wary of bringing any money in. So you kind of end up like the UK in the 70s when they had exchange controls, high unemployment, strikes etc. There are smarter ways to stop offshore avoidance. Usually enforcing the existing laws more thoroughly which is partly what's happening to Jersey - I have a Jersey bank account and get occasional letters about how they are being forced to declare it to the EU/UK tax authorities.

gozur88 11y ago

They want the money. Why would the UK impose huge taxes on money from, say, the US? They would just lose it to Zurich or Monaco.