I don't think there's anything wrong with double taxation agreements. I just think the tax needs to be paid where the income is generated. I think that's almost always how double taxation works for individuals.
The linked article is interesting, thanks. I read about 2/3 of it, I will finish it, and it does feel like a couple of related stories stitched together, but that's a good way of showing how difficult it is to change the incentives, because people start operating within the laws as the exist (even when they recognize that the incentives are problematic) and then they're part of the system.
I have it on good authority that the British Virgin Islands sees Africa as one of its growth markets for offshore financial services. I guess they are in competition with Mauritius, which seems like its had a major breakout as a hub of global capitalism in recent years.
And I mean the question seriously: can you blame them? Singapore, HK, Switzerland, have agglomerated enough that they could plausibly find alternatives. I don't see that that's true for such tiny and remote islands.
No, I don't blame them. Its absolutely the best opportunity available for places like BVI and Mauritius.
The Bahamas is looking down the barrel of some huge repair bills right now. Without revenue from their offshore finance industry, how are they going to manage that?
Well, it was the strongest Atlantic storm ever to make landfall and it looks like the eyewall was parked over the country's second city for about 24 hours, so I'm guessing pretty bad.
I only follow local tropical storm news. I'm parochial that way. Separately, Spike, please email me?
Further to 7, it looks like Freeport was spared the worst of the wind, though flooding pretty bad and everything east of there. This is Grand Bahama's third hurricane in four years - although the worst affected parts are not the ones that got tsunami'd in Matthew or tornadoed in Irma. That means they are also the areas with out the recently rebuild and hardened infrastructure that those other parts have.
These things can take decades to recover from. There are sections of Freeport that were basically abandoned after hurricanes about 15 years ago, and I think we can expect more of that this time around.
Do they have a long term survival plan?
As far as I can tell, the plan seems to be "lurch from emergency to emergency."
So, its a lot like our plan.
But without the strategic depth. Or rather, shallows.
Without the inherent resilience afforded by living on a continental landmass.
No, I don't blame them. Its absolutely the best opportunity available for places like BVI and Mauritius.
I've been thinking about this, and I think it is an example of (essentially) the tragedy of the commons, and a case where behavior which might have seemed reasonable starts to look like it generates significant external costs in a more globalized world.
The problem is, essentially, if this is the best opportunity for Mauritius (and, presumably, the Cayman Islands), there is a collective cost in that it makes it more difficult to tax multi-national entities.
Obviously some of the problems will be resolved once the tax treaties are re-negotiated but, as the article makes clear, that's not a quick or simple step.
Sadly, I don't know what would be a better solution in which BVI or Mauritius could benefit from being good custodians/participants in the global financial system.
I think the way to go is to buy them off. Pay them to untangle themselves from teh dirty business, and then set them up as centers for jobs in back end of the compliance industry.
It isn't a tragedy of the commons, it's a free-rider problem. Tax avoiders free-ride by profiting from public goods without paying for their upkeep; tax havens free-ride by profiting from tax avoiders.
Basically I'm just realizing out loud that tax havens both hurt and benefit some poor people, and suppressing them will involve trashing numerous poor countries with no alternatives. And this would be doubly unjust since many of them are small island states facing national extinction from problems they aren't responsible for. And justice aside, the imminent extinction and lack of alternatives give them limited incentives to co-operate. Though I like Spike's plan.
Like, comparably if less acutely, eliminating hydrocarbons.
If we get the choice, I think we should let them run gambling rackets instead of creating a tax haven.
Quiet, you low-rent Hong Kong copy.
It isn't a tragedy of the commons, it's a free-rider problem.
I'm not sure which is technically more accurate but I called it a tragedy of the commons because I feel like the appropriate response to free riders is sometimes to ignore them -- a free rider doesn't prevent other people from accessing the public resource, they just don't contribute to the public value. Whereas in a tragedy of the commons it becomes more difficult for anybody to get value because of the bad actors.
But I agree with this:
Basically I'm just realizing out loud that tax havens both hurt and benefit some poor people, and suppressing them will involve trashing numerous poor countries with no alternatives.
I'm not sure how to resolve that either (and that's also why I say that I don't blame Mauritius for adopting the strategy that they did; I just think that the external costs are more visible now than they were when Mauritius was signing the tax treaties).
BVI only has something like 35,000 people. You could write each one of them a check for $250,000 for them not to be a tax haven any more, and it would cost a bit more than 1% of the annual US Military budget. And that money would be made back 10 fold in new taxes collected on money that had been previously hidden.