A phony struggle against the shadow economy


In 2000 the OECD made a list of Tax Havens, trying to shame them to comply with international jurisdictions. One of the main arguments of campaigning against tax havens was/ is that it is a part of the fight against the shadow economy. However as Daniel Mitchell explains in this video, the data used to calculate the possible revenues retainable from tax havens is at best: faulty. Further what should be noticed is that most, if not almost all, tax avoidance takes place inside the economy itself, making the campaign against tax havens even more dubious.

Considering the constructive effects of tax havens contribution in the global system of tax competition and vital investment capital for entrepreneurs, the OECD campaign is mistaken. See this video of Richard Teather speaking about tax competition.

Luckily there are no countries left on the OECD list of tax havens, whether this is due to countries complying with the international rules or the OECD realizing their mistake. I think it is of special interest that the two most important tax havens on earth have not yet appeared on the list. As far as I know neither the UK nor the US have changed their legislation concerning international investments. It should of course be for the UK and US governments to decide what domestic legislation they want, and in addition they should stay out of other government’s domestic legislations.