Some Businesses Might Go to Offshore Accounts, But Wouldn’t Most Want to Stay?
Question/Comment: It’s been said that money flows like water. In an economy with a labor pool as talented as America’s, wouldn’t it be a good time to regulate the market so that as money finds its way back into the economy it can only do so under terms that prevent speculation bubbles and special tax treatments from Congress?
Some businesses might flock to set up offshore headquarters, but wouldn’t most want to be part of a fair balanced system? Is this threat of flight real? Or just a way to scare politicians into giving tax breaks?
Paul Solman: It’s a real threat, to be sure. Ever been to Bermuda? Grand Cayman Islands? (Actually, I’ve been trying to wangle a trip to the latter for decades; if you go, take me with you, would you?)
“Off-shore tax havens” earned their name title. But firms and individuals don’t just flee the U.S. to dodge taxes. Suppose YOU had a company, David (and maybe you do); if you thought government red tape was so thick it was suffocating your business, or that some rule or regulation was likely to put you under, but that Bermuda or the Bahamas would welcome you with open arms, and eyes wide shut, mightn’t YOU consider that an offer you’d be a fool to refuse?
That’s why, in the age of globalization, there’s been so much talk of GLOBAL regulation, why there’s a WORLD Trade Organization (WTO), an INTERNATIONAL Labor Organization (ILO), an INTERNATIONAL Bank of Settlements (in Basle), a WORLD Bank, an INTERNATIONAL Monetary Fund. “Economies of the world unite!” a Marxist neo-liberal might shout. Otherwise, firms will run to safest and least meddlesome harbor around.
That said, if the world retreats from globalization, as may well be happening right now, then perhaps potential “Benedict Arnold CEOs” may become less of a problem.