Treasure Islands - Nicholas Shaxson [157]
3.Though the 1998 report did not list the havens, the content was clearly aimed at smaller island centers.
4.Author interview with Dan Mitchell, Washington, D.C., Jan. 16, 2009.
5.David Cay Johnston, “Behind the IRS Hearings, a GOP Plan to End Tax Code,” New York Times, May 4, 1998, http://www.nytimes.com/1998/05/04/us/behind-irs-hearings-a-gop-plan-to-end-tax-code.html?pagewanted=1.
6.David Cay Johnston, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else (New York: Penguin, 2003), p. 148.
7.See “The Liberalizing Impact of Tax Havens in a Globalized Economy,” presentation by Dan Mitchell, Capitol Hill, March 23, 2009, http://www.youtube.com/watch?v=ISfsY1nqoaM&feature=related.
8.Ibid.
9.Paul de Grauwe and Magdalena Polan, “Globalisation and Social Spending,” Cesifo Working Paper No. 885, March 2003, https://lirias.kuleuven.be/bitstream/123456789/119 409/1/cesifo_wp885.pdf.
10.“Table A. Total Tax Revenue as Percentage of GDP,” OECD, http://www.oecd.org/dataoecd/48/27/41498733.pdf.
11.“A Fair Share: Has the Tide Turned for Corporate Profits?” The Economist, August 27, 2009, http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=2512631&story_id=E1_TQPNSGGV. In 2006, for example, just ahead of the economic crisis, U.S. corporate profits were higher as a share of national income, and wages and salaries were lower, than at any time since the Second World War.
12.See David Cay Johnston, “Tax Rates for Top 400 Earners Fall as Income Soars, IRS Data,” Tax Analysts, undated, 2010, http://www.tax.com/taxcom/features.nsf/Articles/0DEC0EAA7E4D7A2B852576CD00714692?OpenDocument.
13.Mitchell’s own book quotes a seminal 2006 European study that baldly explains the problem: “The effect [of falling tax rates] on incorporation is significant and large. It implies that the revenue effects of lower corporate tax rates—possibly induced by tax competition—partly show up in lower personal tax revenues rather than lower corporate tax revenues…. There is reason (after all) to worry about tax competition.” “Corporate Tax Policy, Entrepreneurship and Incorporation in the EU,” CESifo Working Paper No. 1883, December 2006. Also see Lucas Bretschger and Frank Hettich, “Globalisation, Capital Mobility and Tax Competition: Theory and Evidence for OECD Countries,” European Journal of Political Economy 18, no. 4 (November 2002); and S. Ganghof, The Politics of Income Taxation: A Comparative Analysis (European Consortium for Political Research Press, 2006).
14.Michael Keen and Alejandro Simone, “Is Tax Competition Harming Developing Countries More Than Developed?” Tax Notes International 1317, June 28, 2004.
15.Alexander Klemm and Stefan van Parys, “Empirical Evidence on the Effects of Tax Incentives,” IMF Working Paper No. 09/136, July 1, 2009, http://www.imf.org/external/pubs/cat/longres.cfm?sk=23053.0.
16.One such incentive was the tax holiday, which the IMF economists said was “widely regarded as the most pernicious form of incentive.” Britain had briefly tried this gimmick under Prime Minister Margaret Thatcher until it became clear they did not work: set up a ten-year tax holiday, and companies will pack up and leave after nine years and 11 months, or will transfer the business to another subsidiary and get another ten-year holiday. After these failures, however, Africa was still encouraged to embrace them: In 1990 only one sub-Saharan African country offered tax holidays, but a decade later they all did. Often these holidays are available in special export processing zones, which are a bit like small offshore jurisdictions lodged inside the state. When these zones pop up, wealthy locals who want to invest at home inevitably send their money overseas, dress it up in an offshore secrecy structure, then return it, slashing their tax bill in the process.
17.Daniel J. Mitchell, The Moral Case for Tax Havens, video, Center for Freedom & Prosperity, October 2008.
18.This history is explored in more detail in the UK edition of this book, in chapter 3 on Switzerland.