The Economist Endorses Offshore Tax Havens

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The Economist last week presented a 14-page special report on why offshore tax havens are good for us. In 2005 the Tax Justice Network estimated that $255 billion in revenues is lost each year from governments whose citizens hold their funds in offshore tax havens, a figure the magazine says "not everyone believes" even though no one has ever shown this number to be inaccurate. The authors generally downplay the loss of revenues and illegal evasion of tax laws. They seem to feel that the "tax competition" that offshore tax havens provide is healthy, no matter how much this causes democratically elected governments to lose control of their tax and fiscal policies.

Perhaps the most entertaining suggestion is that jurisdictions like the United States lower their taxes to reduce the incentive for tax evasion. By that logic we could reduce speeding on America's highways by raising the speed limits to 150 mph, or reduce stealing by abolishing property rights. If you want real solutions for dealing with tax havens and other causes of the tax gap, see Bob McIntyre's suggestions to the Senate Budget Committee.

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