Mitchell: The Economic Case for Tax Havens

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Daniel Mitchell, Senior Fellow at the Cato Institute, in an article at the Center for Freedom and Prosperity argues that tax havens promote widespread economic prosperity in large part by promoting tax competition between jurisdictions. He asserts that “when politicians have to worry that jobs and investment can cross borders, they are less likely to impose higher tax rates and punitive levels of double taxation.”

In addition, he lists arguments from 9 Nobel laureate economists in favor of tax havens.  James Buchanan  contends that “tax competition among separate units is an objective to be sought in its own right”, Milton Friedman similarly states that “competition among national governments in the public services they provide and in the taxes they impose is every bit as productive as competition among individuals or enterprises”.

As for the argument by many that tax havens should be targeted because they are misused by criminal enterprises or tax frauds, Mitchell responds with a Philip Booth quote: “burglars operate where there is property…however we would not abolish property because of burglars…we should not abolish tax havens either.”

Read the whole piece here or watch the accompanying video here.