The Instigator
brian_eggleston
Pro (for)
Losing
0 Points
The Contender
RoyLatham
Con (against)
Winning
21 Points

The crackdown on international tax havens is worthwhile

Do you like this debate?NoYes+0
Add this debate to Google Add this debate to Delicious Add this debate to FaceBook Add this debate to Digg  
Vote Here
Pro Tied Con
Who did you agree with before the debate?
Who did you agree with after the debate?
Who had better conduct?
Who had better spelling and grammar?
Who made more convincing arguments?
Who used the most reliable sources?
Reasons for your voting decision
1,000 Characters Remaining
The voting period for this debate does not end.
Voting Style: Open Point System: 7 Point
Started: 4/23/2009 Category: News
Updated: 8 years ago Status: Voting Period
Viewed: 1,577 times Debate No: 7946
Debate Rounds (2)
Comments (4)
Votes (4)

 

brian_eggleston

Pro

World leaders at the recent G20 meeting in London agreed that it is time to close the net on tax evaders by putting the squeeze on international tax havens such as the Cayman Islands and Gibraltar (1). Of course, if the established offshore banks are forced to close their doors, there will be plenty of other countries that will be only to happy to flout the will of the international community and welcome mega-rich tax dodgers with open arms.

However, property tycoons, oil barons and inbred aristocrats would then need to entrust their fortunes to relatively unknown institutions such as:

* The Merchant Bank of Mogadishu
* Fraudstein, Fagin and Fiddelbaum's Sub-Ethical Investments
* The Esteemed Bank of Lagos Ltd.
* Honest Ali's Asset Management
* Equity Bank of Eritrea
* Sheikh Madman Inseihn's Payday Loans and Cheque Cashing Services
* Baghdad Investment Banking
* Chancer, Spiv and Wideboy Fund Management (Bandar Seri Begawan) Pty.
* Kabul Capital Ltd.
* Mrs. Madoff's Magic Money-Making Mercantile Bank "you invests your cash, you takes your chance, oi-vay!"

As we know, even well-established American and European banks can go belly-up and leave their clients in the lurch. However, if the government doesn't bail the bank out, they will at least compensate their customers.

Therefore, on balance, it would make sense for the tax evaders to declare their assets, pay the tax and move their money back into regulated banks. This would enable the banks to pay back government loans, thus reducing national debts.

Furthermore, the huge extra tax revenues would allow governments to reduce taxes for decent, hard-working families.

So we can see that the crackdown on tax dodgers will not only strengthen the Western banking system but also put money in the pockets of ordinary people, both of which will help bring a timely end to the global recession.

Thank you.

(1) http://www.thestar.com...
RoyLatham

Con

Pro did not define a "tax haven." The common sense definition is also the one most often given in references:

"A country offering very favorable tax laws for foreign businesses and individuals." http://www.investorwords.com...

Seven other definitions provided on the web all are essentially the same http://www.google.com...

I have no objection to tracking down stolen money or the profits from drug smuggling or other illegal enterprises. Switzerland, for example, cooperates in that while remaining a tax haven for legitimate enterprises. The resolution here is whether some countries should be allowed to have low taxes on money earned within their countries. Low taxes are relative, so that with respect to whatever country has the highest taxes, all other countries in the world are immoral tax havens subject to a crack down.

Consider the example of billionaire investor George Soros. Soros is now a citizen of the United States. One the ways he makes money is to trade foreign currencies, essentially betting on whether a currency like the pound will go up or down with respect to another currency like the dollar. He moved the headquarters of those currency trading operation to Curacao, in the Netherlands Antilles, for tax reasons. http://en.wikipedia.org... Profits on the transactions conducted in Curacao are taxed at a very low rate. Curacao can afford to have the Soros trading operation in their country at a low tax rate because the trading operation consumes very few government services. The employees who live and work there will pay local taxes like everyone else to support community services, but the profits from the enterprise do not. (I'm not too keen on Soros' political view that the government should tax the whiz out of everyone but himself, but that is irrelevant to the functioning of tax havens and his proper use of them.)

If Soros decides to bring the profits of currency trading into the US to invest in enterprises he conducts in the US, he will continue to escape taxes on the profits made on the Curacao enterprise, but he will be subject to any new profits made with the investments made in enterprises in the U.S. This is fair.

Why would Soros, or anyone else, elect to invest in places with higher taxes, like the US, if they have established operation in a tax haven? He unquestionable does so. It is because higher tax places provide advantages for investments that require lots of infrastructure, like supplies of trained workers and large consumer and commercial markets. There is no danger whatsoever that all the fast food franchises, Walmart stores, and wheat farms will move to Curacao to take advantage of the tax structure. Thus the loss of taxes is extremely limited.

Tax havens are no different than other countries, in that Country A is never entitled to tax work performed in Country B. Doing so would be a case of A violating the sovereignty B. The objection to tax havens is no more than that they have tax rates which high tax countries consider to be outrageously low. Tax havens have every right to practice the theory that more prosperity accrues from low tax rates than high tax rates.

Tax havens serve as valuable competition to high tax companies. Economies can be taxed to death. An example is the French tax on wealth, http://www.washingtonpost.com... High taxes amount to transferring wealth from private enterprise to government. If high taxes and accompanying unbounded government translated to prosperity, then North Korea would be the most prosperous county on earth. It is not. Places like Hung Kong and Singapore thrived because of policies of low taxation. However, if high tax countries can successfully prohibit escape to low taxation, then there is no damper on destroying prosperity through excessive taxation. The world can be driven into lower prosperity without annoying counterexamples.

In summary, the attempted crackdown on international tax havens is not worthwhile because:

1. It would kill profits that are eventually repatriated.
2. It loses very little revenue, because only a few types of transactions are economic in tax havens.
3. It is a violation of sovereignty for one country to tax earnings made within another.
4. It would remove an obstacle, by providing an escape, to high-taxes destroying the economies in high-tax countries.

The resolution is negated.
Debate Round No. 1
brian_eggleston

Pro

I should like to thank my opponent for taking the time to respond to my arguments in such a comprehensive and eloquent fashion.

With regard George Soros, he avoids paying tax - which is legal, not evades paying tax - which is illegal.

The aim of the international community is not to criminalize fabulously wealthy individuals such as Soros, but, instead, to minimise their opportunities to dodge their moral responsibility to society by avoiding paying their fair share in tax.

Of course, nobody likes paying tax and if we were fortunate enough to have the opportunity not to, like Soros, most of us would shift the financial burden of running the country to our fellow citizens. However, most of us are taxed at source and so the opportunity to avoid paying tax is not open to us.

The likes of Soros, on the other hand, have the opportunity to shift money below the authorities' radar so that the likes of you and me have to make up the shortfall in tax receipts. In other words, decent, ordinary families are paying shifty tycoons' tax bills - and that's not right.

Now, to address my opponent's closing points in turn, he wrote:

"1. It would kill profits that are eventually repatriated."

Given the opportunity to make $10 million over $7 million for the same amount of effort, obviously we would all choose the former. However, given the opportunity to make $7 million or nothing at all, we would all choose the former. That's just common sense.

"2. It loses very little revenue, because only a few types of transactions are economic in tax havens."

We don't know that to be the case as tax havens are, by definition, secretive. Indeed, even people with relatively modest incomes utilise them. For example, I first took advantage of them when I became a company director 15 years ago. At that time I paid the same income tax as a waiter working on minimum wage, despite paying more than they earned per hour to park my brand new sports car outside their restaurant. Now that's not fair, is it?

"3. It is a violation of sovereignty for one country to tax earnings made within another."

It is normal for the international community to put pressure on individual governments to change their domestic policies. Iran and North Korea are contemporary examples of where there is an international consensus opposed to their regimes' legislation.

"4. It would remove an obstacle, by providing an escape, to high-taxes destroying the economies in high-tax countries."

In the global village, in which we all live, high tax economies will continue, as they do now, to discourage inward investment. It is for these countries' governments to weigh up the effects of this against the increased welfare of their population and strike an appropriate balance. Nothing changes there. I am a frequent visitor to France, the country my opponent cited, and I can confirm that there is little evidence of the mega-rich (except for Paris' 8eme and 16eme arrondisements and the Cote d'Azur). On the other hand, the vast majority of the population seem to be prosperous and there is relatively little poverty (outside the certain North African dominated suburbs of Paris and Marseille). This, it seems to me, is a very good thing.

Thank you.
RoyLatham

Con

Pro argues that the likes of Soros "have the opportunity to shift money below the authorities radar" while "decent ordinary families are paying shifty tycoons tax bills." Actually, there is no reason why anyone couldn't use a foreign tax haven to speculate in current exchange. Why don't we all do that? It is because it is a peculiar high risk enterprise, and one that requires very little government infrastructure to conduct. Most of us are involved in activities that require consumer or government markets, and require communications and all the other things that taxes pay for. The oddball things Soros and his kin do require very little of what taxes pay for, so it is unfair that they be charged for those things.

Beyond that, Pro supposes that the rich are characteristically escaping taxes through tax shelters, unfairly burdening ordinary people. That's not true. In the United States, the top 10% of income earners are paying 90% of the taxes; we are rapidly approaching the point where half of income earners pay no income taxes at all. In New York City, half the taxes are borne by fewer than a half percent of the taxpayers. Ordinary people are getting vastly more government services than they pay for.

To the specific points:

1. Pro argues that even though profits are repatriated, that the original tax on the profits is still lost. That's true as far as it goes. It still means that the loss of tax revenue is not as great as it might be. Also, if fairness demands that profits earned in foreign countries be taxed, then fairness also would dictate that losses incurred in foreign countries be tax deductible. Out friend Soros, in an "oops" moment, lost several hundred million dollars virtually overnight. (I'd never do that.) One wonders what the overall track record is of all the people who use tax havens. It might be a net loss, because these are highly speculative ventures. In Pro's argument, only winners count. The repatriated profits, however, in fact only come from winners. So repatriated profits are a greater offset that it seems.

2. I argued "It loses very little revenue, because only a few types of transactions are economic in tax havens." Pro responds, "We don't know that to be the case as tax havens are, by definition, secretive." So is it really possible that there are vast numbers of Walmart stores, wheat farms, or trucking companies secreted away in Curacao? No. it isn't possible. List all of the things that go into a modern economy, and then strike off the ones that are impossible to move to a tax haven. What is left? Really nothing much but some forms of esoteric financial wheeling and dealing like currency speculation.

Moreover, those transactions are not very secretive. Tax havens are not "by definition" secretive as Pro asserts. For many years, the U.S. was a tax haven with respect to Europe; we've pretty well fixed that now. Everyone knows about Soros' business in Curacao. What is secretive is money stashed by drug lords and by dictators planning for retirement. I agree with Pro that illegal transactions ought to be tracked down. Secrecy can be maintained with or without a tax haven. This is debate is about tax havens.

3. I argued, "It is a violation of sovereignty for one country to tax earnings made within another." Pro's rebuttal is that sovereignty is violated all the time, he cites the cases of Iran and North Korea being pressured over their domestic policies. I believe it is appropriate to pressure countries over human rights violations, because human rights have an agreed-upon universal nature. However, I see no right of government to shake down people for high taxes, and especially no right to tax enterprises conducted in other countries. I would assert the opposite, that there is a right to escape high taxes, providing one is willing to give up the services provided by the taxes as well. How far should big government be allowed to reach in its desire to grab you by the heels, turn you upside down, and shake the money out of you? I would say not as far as Curacao.

4. Pro argues "...high tax economies will continue, as they do now, to discourage inward investment. It is for these countries' governments to weigh up the effects of this against the increased welfare of their population..." He asserts that it is the sole province of high tax governments to determine the tradeoff between taxes and services, and to then impose that decision worldwide. But why do low tax governments have no right to make the same tradeoff decision, and decide in favor of lower taxes and services? Pro does not suggest why high-tax countries have this unique right. I believe it is because he knows, and I think all believers in big government also know, that if they go too far in taxation, people of ability will leave -- if they can. Only by destroying alternatives can this be prevented, so they set out to do that.

Pro thinks France is a wonderful place because there are only a relatively few examples of conspicuous wealth, and he claims that as virtue of high taxation. By that logic, North Korea must be a paradise, because there are even fewer examples of conspicuous wealth. Ah, but North Korea has universal poverty and France does not, so all government has to do is stop high taxation short of completely destroying the economy. But what keeps government from going too far? In North Korea, the people could not leave so there was no ultimate deterrent to complete subjugation. That story is played out in old East Germany, in Cuba, and many other places. The French, however, can still escape and that's a deterrent. The whole point of Pro's arguments is that no escape from high taxation should be allowed anywhere.

In summary, it's fine to crack down on criminals, but this debate is about whether any country on earth should be allowed to have low taxes on transactions taking place entirely within its borders. They should, because it is unfair to tax for services not used, because international sovereignty should extend to countries having their own tax policies, and because people have a right to escape excessive taxation.

The resolution is negated.
Debate Round No. 2
4 comments have been posted on this debate. Showing 1 through 4 records.
Posted by RoyLatham 8 years ago
RoyLatham
Hah ... perhaps a new record for lack of interest in a debate.
Posted by RoyLatham 8 years ago
RoyLatham
I'm relying heavily on there not being a scoring category for "amusing." :)
Posted by Clockwork 8 years ago
Clockwork
Shoot. Eggleston v. Latham, I'm going to have a hard time deciding this one. Should be a good (or amusing) debate.
Posted by I-am-a-panda 8 years ago
I-am-a-panda
Of course, this never works in theory, because aristocratic, Oil barons, Bank Counts and Earls of Sandwiches are all "me, me, me". The adequate response is "Marx, Marx, Marx!"
4 votes have been placed for this debate. Showing 1 through 4 records.
Vote Placed by F-16_Fighting_Falcon 6 years ago
F-16_Fighting_Falcon
brian_egglestonRoyLathamTied
Agreed with before the debate:--Vote Checkmark0 points
Agreed with after the debate:--Vote Checkmark0 points
Who had better conduct:--Vote Checkmark1 point
Had better spelling and grammar:--Vote Checkmark1 point
Made more convincing arguments:-Vote Checkmark-3 points
Used the most reliable sources:--Vote Checkmark2 points
Total points awarded:03 
Reasons for voting decision: Pro's argument relies on the assumption that only wealthy people will be able to use "tax havens." Con adequately rebuts that not only can every country be considered a tax haven and that it is all relative, but also that anyone can do it as long as they are willing to take the risk. With this he shows that it is not only rich people who can do it negating Pro's moral argument that the poor can't be held responsible for the taxes of the "shifty" rich people.
Vote Placed by Atheistassociate 7 years ago
Atheistassociate
brian_egglestonRoyLathamTied
Agreed with before the debate:-Vote Checkmark-0 points
Agreed with after the debate:-Vote Checkmark-0 points
Who had better conduct:-Vote Checkmark-1 point
Had better spelling and grammar:--Vote Checkmark1 point
Made more convincing arguments:-Vote Checkmark-3 points
Used the most reliable sources:--Vote Checkmark2 points
Total points awarded:04 
Vote Placed by Clockwork 8 years ago
Clockwork
brian_egglestonRoyLathamTied
Agreed with before the debate:-Vote Checkmark-0 points
Agreed with after the debate:-Vote Checkmark-0 points
Who had better conduct:-Vote Checkmark-1 point
Had better spelling and grammar:-Vote Checkmark-1 point
Made more convincing arguments:-Vote Checkmark-3 points
Used the most reliable sources:-Vote Checkmark-2 points
Total points awarded:07 
Vote Placed by RoyLatham 8 years ago
RoyLatham
brian_egglestonRoyLathamTied
Agreed with before the debate:-Vote Checkmark-0 points
Agreed with after the debate:-Vote Checkmark-0 points
Who had better conduct:-Vote Checkmark-1 point
Had better spelling and grammar:-Vote Checkmark-1 point
Made more convincing arguments:-Vote Checkmark-3 points
Used the most reliable sources:-Vote Checkmark-2 points
Total points awarded:07