Tax Competition

Do we need to coordinate our tax policy with other countries? Many observers think so.

Because different nations tax investment income and capital gains differently, many wealthy individuals can go shopping for a favorable tax venue.

“No fair!” cry some. “Those rich aren’t paying their fair share.”

But this goes back to what you see as government’s primary role. If it’s to re-slice the pie, then yes, we need more tax policy coordination. But if government’s role is mainly to make sure people aren’t robbed or cheated then a healthy dose of tax competition is a useful check on the acquisitive state.

Lost in all this discussion of a “fair share” is the definition if what’s fair. But as long as people can move, some states will attract them by defining fairness by letting them keep more of their own money. That sounds fair to me.

Douglas R. Tengdin, CFA
Chief Investment Officer
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