In a Revenue-Hungry World, a Tax Haven Is Still a Wonderful Thing


Gimme tax shelter

My college French is sufficiently rusty that I'm not going to try to conjure up the Gallic equivalent of "Eduardo Saverin wants to de-friend the United States of America," but I'm sure newly minted President of the Republic Francois Hollande will come up with something pretty soon. By promising to tax the wealthy in his country at the pillow-over-the-face rate of 75 percent, he tempted those long-time rivals across the Channel to offer refuge to mugging-averse French citizens. And if a haven so close to home proves insufficiently haven-y, tax refugees can always look east — really, really far east, to where Singapore is beating the Swiss at their own game with low taxes and a business-friendly environment.

Taking advantage of an opening he couldn't refuse, Britain's Prime Minister David Cameron remarked, "When France sets a 75 percent top income tax rate we will roll out the red carpet, and we will welcome more French businesses which will pay their taxes in Britain."

Britain isn't necessarily known as a tax haven — just ask the Rolling Stones — but everything is relative, and relative to France … well … the UK looks pretty good. And frankly, it's easy to remain a tax haven despite the European Union's militant stance against such refuges when your neighbors keep lowering the bar.

Well … Unless you're Swiss, I guess, and you've been taking that pro-tax campaign seriously, pissing away, in the process, your big attraction to companies such as multinational commodities trading firms. Reports Reuters:

Industry sources say it is now tough for new firms to negotiate tax rates in Switzerland below the official 10-12 percent rate usually granted to "holding companies", whereas traders in Singapore can get a 5-10 percent rate via the Global Trader Programme. …

Tax breaks may be tougher to come by as Switzerland faces growing pressure from the European Union, which says that some cantonal tax agreements—'fiscal holidays' which can slash federal taxes in half over five-year periods—amount to unauthorised state aid.

Business people moving operations to Singapore also cite cost of living and lifestyle as attractions in the city state, as well as the fact that the place actually has ports and is conveniently located. Switzerland, on the other hand:

Clyde & Co.'s Knowles said Singapore's position as a shipping hub means "it has warehouses and storage. It is very different from somewhere like Geneva which has no real reason, beyond tax advantages, from being a trading centre."

Countries succumbing to international pressure to hike taxes and collaborate with foreign tax collectors might be overlooking the likelihood that, in a competitive world in which people have to make use of their comparative advantages, one of those advantages might be refraining from sucking people dry.

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  1. I have a cunning plan. The U.S. should become a giant tax shelter. We could suck all of the wealth from competing nations and go into a serious economic boom.

    1. Genius! Better tell Robomney quick, I’m sure they’ll love it.

    2. The U.S. should become a giant tax shelter.

      While you are at it, see if you can do something about the overbearing regs as well.

      1. Okay, done! A business-friendly country with limited government, low, low taxes, and individual liberties for all! Jesus, how come nobody ever came up with this idea before?

        1. Jesus, how come nobody ever came up with this idea before?

          They did, but some ass gave it a French-ish sounding name. And you know how that works out.

          1. I deem it prolibertatism.

          2. Or maybe prolibertation.

            1. How about procorporatocracy?


            2. Hum, maybe. But that liber part sounds…um…foreign.

                1. FREEE-DOMMMism?

                  Now you’re talking.

                  Free – everyone likes free.
                  Domm – sex – everyone likes sex.

                  Free sex – a winner.

                  1. Something wrong with the world when the word “sexism” means something bad.

                    1. “Damn right I’m a sexist. What are you, some kind of celibate anti-sex freak?”

  2. The straw that broke Switzerland’s back was the deal UBS and IRS struck to name names and essentially turn turtle on their clients. Since then, over the past two years, something like half a trillion has gone Singapore’s way in transfers from Swiss banks (though the Geneva Outfit is setting up shop quick as they can over there).

    Another fave landing spot for cash is Hong Kong – at least for the next ten years I’d guess. Given the problems Europe is facing and the increasingly schizoid behavior of the US with its own banking system (see UBS/IRS deal and Patriot Act in general) me thinks Singapore and Hong Kong will be so flush with wealth over the next couple years.

  3. M. Saverin veut de-friender les Etats-Unis.

  4. in a competitive world in which people have to make use of their comparative advantages, one of those advantages might be refraining from sucking people dry


  5. Always good to put to the Laffer Curve to the test in the real world.

    Please France. Blow up your economy. The world could use a refresher course. No one ever thought the Greeks had a viable economy in the first place.

    1. You know who else liked to blow up France?

  6. If Britain’s on the phone offering you a tax shelter, you’re deep in do-do.

  7. One problem with Singapore when SHTF is that, unlike Switzerland, it’s surrounded by desperately poor nations, with the PRC right around the corner too, no military to speak of and no allies.

    1. I wouldn’t discount Singapore in a fight. Their military and police could power up like altered beast in 2 seconds if there was an offending asian nation on their borders. Not saying they would survive, but it would give any invaders pause.

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