Tax Heaven

At the G-20 meeting in London, the world’s leaders took some time from the urgent business of saving the world’s economies to complain about tax havens.
I’m sure that low-tax states like Hong Kong are an irritant to countries like France. After all, the top personal tax rates are 60% lower in the Far East than they are in Europe. If France could go after the income of Hong Kong residents, that would allow them to collect a lot of money.

Such tax harmonization schemes go back as far as taxation itself. As long as states have been collecting revenues from their people, people have been finding ways to avoid paying them. Typically, competition between countries for business and capital have kept rates low. But coordination among states-some would call it collusion-tends to raise tax rates. 230 years ago Adam Smith wrote:
“People of the same trade seldom meet together … but the conversation ends in ? some contrivance to raise prices.”
This statement is often applied to price-fixing in business. But when governments chase down ex-residents to collect taxes, they’re acting like garden-variety monopolists themselves.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2017-07-17T12:35:23+00:00 April 7th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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